Lumen OHM Assessment

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On March 1, 2020, Tebow Company purchased a patent for $171,000 cash.

Although the patent gives legal protection for 21 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.

Journal
Date	Description	Debit	Credit
a
a

b
b

Depletion per unit = (171000`-`0)`/`4 = 42750 per unit. Depletion expense = 42750 X 0.83333333333333 = 35625

Journal
Date	Description	Debit	Credit
a	Patent	171,000
a	Cash		171,000

b	Amortization Expense-Patent	35,625
b	Patent		35,625