Question

Crane Company purchases a patent for $161,900 on January 2, 2022. Its estimated useful life is 5 years. (a) Prepare the journal entry to record amortization expense for the first year. (Credit account titles are automatically indented when amount

Answer 1

Answer:

Explanation:

The journal entry is shown below:

Amortization expense - Patent A/c Dr $32,380

     To Patent A/c $32,380

(Being amortization expense for the first year is recorded)

The computation is shown below"

= Purchase cost of patent ÷ estimated useful life

= $161,900 ÷ 5 years

= $32,380

For the intangible assets, the amortization expense is considered, not the depreciation expense and the same is to be taken.