Asked by Victoria Nguyen on May 02, 2024
Verified
A company purchases a patent for $44,000. The patent will be amortized over 5 years. The entry to record the amortization in the first year is:
A) debit Patents $44,000; credit Cash $44,000.
B) debit Amortization Expense, Patents $44,000; credit Patents $44,000.
C) debit Amortization Expense, Patents $8,800; credit Patents $8,800.
D) debit Patents $11,000; credit Amortization Expense, Patents $11,000.
Patent
A legal right granted by the government to an inventor, giving them exclusive rights to make, use, sell, and import an invention for a certain period of time.
Amortization Expense
An operating expense on the income statement relating to intangible assets.
- Understand the accounting practices for intangible assets, covering amortization, impairment, and write-offs.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
C
Explanation :
The correct entry to record the first year's amortization of the patent is to debit Amortization Expense for $8,800 and credit Patents for $8,800. This is because the $44,000 cost of the patent is being spread evenly over 5 years, resulting in an annual amortization expense of $8,800 ($44,000 / 5 years).
Learning Objectives
- Understand the accounting practices for intangible assets, covering amortization, impairment, and write-offs.