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ID: 2720196 • Letter: W
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Date
Account Titles and Explanation
Debit
Credit
2010
(To record research and development expenses)
2010
(To record legal expenses)
2010
(To record amortization expense)
2011
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Date
Account Titles and Explanation
Debit
Credit
2012
(To record patents)
2012
(To record amortization expense)
2013
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Account Titles and Explanation
Debit
Credit
During 2010, George Winston Corporation spent $168,770 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2010, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $39,720 related to the patent were incurred as of October 1, 2010.Warning
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Explanation / Answer
Computation of Amortization Expense to be recorded in 2012
Amortization Expense from Jan 1,2012 to May 31,2012 = (39720/10)*(5/12) = $1,655
Amorgtization Expense from Jun 1,2012 to Dec 31, 2012 = [(39720-993-3972-1655+12040)/12]*(5/12) = $1,567
Total Amortization for 2012 = 1567 + 1655 = $3,222
The Journal Entries are shown below
2012 Patents 12040
Cash 12040
2012 Amortization Expense 3,222
Patents 3,222
2012 Amortization Expense 3,762
Patents 3,762
Journal Entries for 2014 and 2015
Book Value on Jun 1,2012 = 45140
less:- Amortization for remaining 2012 = 1567
less:- Amortization for 2013 = 3762
Book Value as on Jan 1,2014 = 39,811
2014 Amortization Expense (39811/2) 19,905
Patents 19,905
2015 Amortization Expense (39811/2) 19,905
Patents 19,905
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