Practice Problem 12-1 (Part Level Submission) Oriole Co., organized in 2017, pro

Question

Practice Problem 12-1 (Part Level Submission) Oriole Co., organized in 2017, provided you with the following information. 1. Purchased a license for $31,680 on July 1, 2017. The license gives Oriole exclusive rights to sell its services in the tri-state region and will expire on July 1, 2025 2. Purchased a patent on January 2, 2018, for $75,800. It is estimated to have a 5-year life 3. Costs incurred to develop an exclusive Internet connection process as of June 1, 2018, were $85,000. The process has an indefinite life 4. On April 1, 2018, Oriole Co. purchased a diode manufacturer for $700,600. Goodwill recorded in the transaction was $115,000. 5. On July 1, 2018, legal fees for successful defense of the patent purchased on January 2, 2018, were $15,390, 6. Research and development costs incurred as of September 1, 2018, were $85,000 Prepare the journal entries to record all the entries related to the patent during 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, enter 0 for the amounts. Record journal entries in the order presented in the problem.) Account Titles and Explanation Debit Credit

Explanation / Answer

Amortisation of patent purchased on 2 jan 2018 : 75800/5 = 15160

Amortisation of patent (legal fees) on 1 july :15390/5 =3078 per year

Amortisation for 2018 (1 july -31dec] 3078*6/12 = 1539

Total amortisation : 15160 +1539 = 16699

Date Account Debit credit Jan 2 2018 Patent 75800 cash 75800 [Being Patent purchased] July 5 2018 Patent 15390 cash 15390 [Being legal fees paid for successful defense ] Dec 2018 Amortisation expense 16699 Accumulated amortisation -Patent 16699

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