Question

Sunland Company purchases a patent for $169,300 on January 2, 2017. Its estimated useful life is 5 years. (a) Compute amortization expense for the first year. Amortization Expense (b) Show how this patent is reported on the balance sheet at the end of the first year. : $

Answer 1

Answer:

The presentation and journal entry is shown below:

Explanation:

1.   Amortization expense $33,860

               To Patent  $33,860

(Being the amortization expense is recorded)

It is calculated below:

= $169,300 ÷ 5 years

= $33,860

2.  The presentation is shown below:

                                                 Sunland company

                                              Balance sheet (Partial)

Intangible assets:  

Patent is ($169,300 - $33,860) $135,440