On January 2,20D,Daintry Company Purchased a Patent for $380,000 from an Inventor

question 50

Essay

On January 2,20D,Daintry Company purchased a patent for $380,000 from an inventor who had developed a new manufacturing process.At the time of the purchase,the patent had a remaining legal life of 12 years,but Daintry estimated the useful life to the company to only be 10 years.
Required:
1.Prepare the journal entry to record Daintry's purchase of the patent.
2.Prepare the journal entry to record amortization of the patent for 20D,assuming that no contra account is used.
3.At the start of 20G,after amortization had been recorded for three years,Daintry concluded that the total useful life of the patent would be 7 years,rather than 10.Record Daintry's amortization expense for 20G.

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Definitions:

Net Capital Outflow

The gap between nationals purchasing assets from abroad and foreigners investing in the nation's assets.

Loanable Funds

A term used in economics to describe the market where savers supply funds for loans to borrowers.

Net Capital Outflow

The imbalance between domestic individuals acquiring assets abroad and foreigners securing assets domestically.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices during a specified period of time.