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    emerald_sangria's Avatar
    emerald_sangria Posts: 7, Reputation: 1
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    #1

    Sep 27, 2013, 06:48 PM
    Accounting: Amortization of Patent
    Amortization of Patent

    On December 31, it was estimated that goodwill of $750,000 was impaired. In addition, a patent with an estimated useful economic life of 18 years was acquired for $864,000 on August 1.

    Journalize the adjusting entry on December 31 for the amortization of the patent rights.

    Dec 31 Amortization Expense-Patents??
    Patents??


    I've tried 28000 ((864000/18) * (7/12)) and 32000 ((864000/18) * (8/12)) and neither one of these answers seem to be correct.
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
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    #2

    Sep 27, 2013, 11:20 PM
    You need to calculate the number of months in use as of December 31. From August to December it is 5 months. Hence:

    864,000/18 = 48,000 per year and
    48,000/12 = 4,000 per month
    The amortization will be 4,000 x 5 = 20,000
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