This is my 3rd attempt to get a question answered. Here we go again.. My question is related to the patents. The company purchased 500,000. are the steps for amoritizing
This is my 3rd attempt to get a question answered. Here we go again.. My question is related to the patents. The company purchased 500,000. are the steps for amoritizing on a straight-line basis with no salvage value? The estimated useful life of patents is 30 years and on December 31 2020 the value of the patent is estimated to be 100,000. I think it is a decline however unsure of how to show it on the journal. Transcribed Image Text: Brown Company paid cash to purchase the assets of Coffee Company
on January 1, 2019. Information is as follows:
Total cash paid
The building is depreciated using the double-dedining balance
method. Other information is:
Estimated useful life in years
The machinery is depreciated using the units-of-production method.
Other information is:
Salvage value, percentage of cost
Estimated total production output in
Actual production in units was as
The patents are amortized on a straight-line basis. They have no salvage valu.
Estimated useful life of patents in
On December 31, 2020, the value of the
patents was estimated to be
Where applicable, the company uses the % year rule to calculate
depreciation and amortization expense in the years of acquisition
and disposal. Its fiscal year-end is December 31.
The machinery was traded on December 2, 2021 for new machinery.
Other information is:
Fair value of old machinery
List price for new machinery
Estimated useful life of new machinery in
Estimated salvage value of new
The new machinery is depreciated using the straight-line method and
On August 14, 2023, an addition was made. This amount was
material. Other relevant information is as follows:
Amount of addition, paid in cash
Number of years of useful life from 2023
(original machinery and addition):
Salvage value, percentage of addition
Required: Prepare journal entries to record:
1 The purchase of the assets of Coffee.
2 Depreciation and amortization expense on the purchased assets for 2019.
3 The decline (if any) in value of the patents at December 31
4 The trade-in of the old machinery and purchase of the new
5 Depreciation on the new machinery for 2021.
6 Cost of the addition to the machinery on August 14, 2023.
7 Depreciation on the new machinery for 2023.
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