Problem:
A patent was acquired by Grotius Corporation on January 1, 1999, at a cost of $72,000. The useful life of the patent was estimated to be 10 years. At the beginning of 2003, Grotius spent $9,000 in successfully posecuting an attempted infringement of the patent. At the beginning of 2004, Grotius puchased a patent for $25,000 that was expected to prolong the life of its original patent for 5 additional years. On July 1, 2007, a competitor obtained rights to a patent that made the company's patent obsolete. Grotius records amortization expense directly with a credit to the patent account.
Required:
Question: Calculate the following amounts for Grotius Corporation.
- Amortization expense for 1999
- The balance in the Patent account at the beginning of 2003, immediately after the infringement suit.
- Amortization expense for 2003.
- The balance in the Patent account at the beginning of 2004, after the purchase of the additional patent.
- Amortization expense for 2004.
- The amount of loss recorded at july 1, 2007.
Note: Please show how you came up with the solution.