EX 10-20 Amortization entries

Greenleaf Company acquired patent rights on January 6, 2009, for $300,000. The patent has a useful life equal to its legal life of 12 years. On January 3, 2012, Greenleaf successfully defended the patent in a lawsuit at a cost of $72,000.
a. Determine the patent amortization expense for the current year ended December 31, 2012.
b. Journalize the adjusting entry to recognize the amortization.

Answer:
a. ($300,000/12) + ($72,000/9) = $33,000 total patent expense
b.
Amortization Expense—Patents .................................. 33,000
Patents.................................................  33,000    
Amortized patent rights ($25,000 + $8,000).


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