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Although the patent gives legal protection for 20 years, the patent will be used for only 4 years.
Assume straight-line amortization.
Amortization per unit
(Cost `-` Res. Value)`/`Time = Amortization per year
( `-` )`/` =
Amortization per year X portion of year = Amortization
X =
Journalize a) the purchase of the patent, and b) the amortization expense of the patent as of December 31, 2020.
Date Description Debit Credit a a b b Date Description Debit Credit a Patent 176,000.00 a Cash 176,000.00 b Amortization Expense-Patent 36,666.67 b Patent 36,666.67