Computing Subsequent Carrying Amount of Patents In January of Year 1, Ford Co. purchased a patent from a research institution for $625,000. The patent was estimated to have a useful life of 15 years. In December of Year 2, Ford Co. unsuccessfully defended the patent in legal proceedings. The fair value of the patent on December 31 of Year 2, is now estimated to be $125,000 with a 2-year useful life. a. Record the entry for the legal fees of $50,000, paid in cash. b. Record any adjusting entry required on December 31 of Year 2. c. Determine the carrying value of the patent on December 31 of Year 2.
Computing Subsequent Carrying Amount of Patents In January of Year 1, Ford Co. purchased a patent from a research institution for $625,000. The patent was estimated to have a useful life of 15 years. In December of Year 2, Ford Co. unsuccessfully defended the patent in legal proceedings. The fair value of the patent on December 31 of Year 2, is now estimated to be $125,000 with a 2-year useful life. a. Record the entry for the legal fees of $50,000, paid in cash. b. Record any adjusting entry required on December 31 of Year 2. c. Determine the carrying value of the patent on December 31 of Year 2.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 76APSA
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