Problem: In early January 20X6, Rattlesnake Corporation applied for a patent, incurring legal costs of $30,000. In January 20X7, Rattlesnake incurred $9,000 of legal fees in a successful defense of its patent. on January 20X6, the patent was expected to have a useful life of ten years.
Requirement:
(1) Compute the following items for Rattlesnake Corporation. Show supporting computations. Round all calculations to the nearest whole dollar.
(a) Patent amortization expense for 20X6.
(b) Carrying value of the patent at December 31, 20X6.
(c) Patent amortization expense for 20X7.
(d) Carrying Value of the patent at December 3,20X7.
(2) Compute the 20X8 patent amortization expense and the December 31, 20X8 carrying value of the patent, assuming that at the beginning of 20X8, based on new market research, Rattlesnake determines that the fair value of the patent is $27,500. Estimated future cash flows from the patent are $30,000 on January 3, 20X8. Round all calculations to the nearest whole dollar