On June 30, 2011, Mobley Corporation Acquired a Patent for $4

question 93

Essay

On June 30, 2011, Mobley Corporation acquired a patent for $4 million. The patent was estimated to have an eight-year life and no residual value. Mobley uses the straight-line method of amortization for intangible assets. At the beginning of January 2013, Mobley successfully defended its patent against infringement. Litigation costs totaled $650,000.

Required:

1. Calculate patent amortization for 2011 and 2012.
2. Prepare the journal entry to record the 2013 litigation costs.
3. Calculate amortization for 2013.
4. Repeat requirements 2 and 3 assuming that Mobley prepares its financial statements according to International Financial Reporting Standards.

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Definitions:

Tibialis Anterior

A muscle in the front part of the lower leg that is involved in dorsiflexion and inversion of the foot.

Gastrocnemius

A major muscle located in the back part of the lower leg, contributing to plantar flexion of the foot.

Soleus

A powerful muscle in the back part of the lower leg (the calf) that helps with walking and standing.

Tibialis Posterior

The tibialis posterior is a muscle in the lower leg involved in stabilizing the ankle and supporting the arch of the foot during movement.