Lumen OHM Assessment

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Question 1

On March 1, 2020, Tebow Company purchased a patent for $165,000 cash.

Although the patent gives legal protection for 22 years, the patent will be used for only 6 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 = (165000`-`0)`/`6 = 27500 per unit. Depletion expense = 27500 X 0.83333333333333 = 22916.666666667

Journal
Date	Description	Debit	Credit
a	Patent	165,000.00
a	Cash		165,000.00

b	Amortization Expense-Patent	22,916.67
b	Patent		22,916.67