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

    Sep 27, 2013, 06:27 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.
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Sep 28, 2013, 09:59 AM
    The number of months from Aug 1 to Dec 31 is 5 months, so your fraction will be 5/12. The rest of your calculation is correct.

    Your formula is:
    $864,000/18 * 5/12
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