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Taylor Swift Corporation purchases a patent from Salmon Company on January 1, 2020, for $54,000. The patent has a remaining legal life of 16 years. Taylor Swift feels the patent will be useful for 10 years. Prepare Taylor Swift's journal entries to record the purchase of the patent and 2020 amortization. Assume that at January 1, 2019, the carrying amount of the patent on Taylor Swift's books is $43, 200. In January, Taylor Swift spends $24,000 successfully defending a patent suit. Taylor Swift still feels the patent will be useful until the end of 2026. Prepare the journal entries to record the $24,000 expenditure and 2019 amortization.

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A) The journal entries to record the purchase of the patent and its 2020 amortization for Taylor Swift are as follows:

January 1, 2020 Debit Patent $54,000

Credit Cash $54,000

  • To record the purchase of the patent.

December 31, 2020

Debit Patent Amortization Expense $5,400

Credit Accumulated Amortization $5,400 ($54,000/10)

  • To record the amortization expense for the year.

B) The journal entries to record the $24,000 expenditure and 2019 amortization for Taylor Swift are as follows:

January 1, 2020 Debit Patent $24,000

Debit Cash $24,000

December 31, 2020 Debit Patent Amortization Expense $6,720

Debit Accumulated Amortization $6,720

Data and Calculations:

A) Cost of patent = $54,000

Estimated useful life = 10 years

B) Carrying value of patent = $43,200

Cost of defending patent = $24,000

Transaction Analysis:

A) January 1, 2020 Patent $54,000 Cash $54,000

December 31, 2020 Patent Amortization Expense $5,400 Accumulated Amortization $5,400 ($54,000/10)

B) January 1, 2020 Patent $24,000 Cash $24,000

December 31, 2020 Patent Amortization Expense $6,720 Accumulated Amortization $6,720 ($43,200 + $24,000/10)

Learn more about journalizing entries at https://brainly.com/question/17201601

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