Answer:
The journal entries to record the purchase of the patent is
Debit Intangible asset $40,000
Credit Cash account $40,000
The journal entries to record 2017 amortization
Debit Amortization expense $4,000
Credit Accumulated amortization $4,000
Explanation:
Since Marigold feels the useful life of the patent is 10 years, that becomes the estimated useful life for computing the annual amortization. Amortization is the systematic allocation of cost over the useful life of an intangible asset.
Given;
Cost of patent = $40,000
Date of purchase = January 1, 2017
Useful life = 10 years
Amortization = cost/useful life
= $40,000/10
= $4,000
The journal entries to record the purchase of the patent is
Debit Intangible asset $40,000
Credit Cash account $40,000
The journal entries to record 2017 amortization
Debit Amortization expense $4,000
Credit Accumulated amortization $4,000
