Respuesta :
Answer and Explanation:
The Journal entry is shown below:-
1. Patent Dr, $510,000
To Cash $510,000
(Being the purchase of a patent is recorded)
2. Amortization expense Dr, $85,000
($510,000 ÷ 6)
To Cash $85,000
(Being amortization of a patent for the year 2021 is recorded)
3. Amortization expense $85,000
To Cash $85,000
(Being amortization of a patent for the year 2022 is recorded)
4. Patent Dr, $60,000
To Cash $60,000
(Being costs of successfully defending a patent infringement suit is recorded)
5. Amortization expense $100,000
To Patent $100,000
(Being amortization of patent for the year 2023 is recorded)
Working Note
Cost of old annual amortization = $510,000 ÷ 6 years × 2 years
= $85,000 × 2 years
= $170,000
Unamortization cost = $510,000 - $170,000
= $340,000
Estimated remaining life = 6 years - 2 years
= 4 years
New Unamortization cost = $340,000 + $60,000
= $400,000
New annual amortization cost = $400,000 ÷ 4 years
= $100,000
