Answer:
a. Amortization expense for Year 4=$572,062.5/5=$114,412.50
b. Adjusting entry to be recorded in respect of amortization as at December 31, Year 4:
Debit Credit
Amortization expense $114,412.50
Accumulated amortization $114,412.50
Explanation:
Cost of patent right at Year 1= $857,700
Less:Accumulated amortization for three years=($321,637.5)
($857,700/8)*3
Net book value of patent rights on January 7, year 4=$536,062.5
Add: Cost to defend lawsuit related to patent right = $36,000
Total cost at start of Year 4=$572,062.5
a. Amortization expense for Year 4=$572,062.5/5=$114,412.50
b. Adjusting entry to be recorded in respect of amortization as at December 31, Year 4:
Debit Credit
Amortization expense $114,412.50
Accumulated amortization $114,412.50
