The following financial statement note information was provided for two recent comparative years for Johnson & Johnson, one of the world's most comprehensive health-care products companies. Patents are a significant asset for Johnson & Johnson; thus, accumulated amortization information is provided in the notes to provide users additional disclosure beyond what is generally required.
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Jan. 2, 2005
(in millions)
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Dec. 28, 2003
(in millions)
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Patents
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$3,974
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$3,798
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Accumulated amortization
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(1,125)
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(818)
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Patents, net
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$2,849
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$2,980
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Assume there were no patent sales during 2004.
a. Reproduce the journal entry of patent purchases recorded for 2004.
b. Reproduce the adjusting journal entry for amortization expense recorded for 2004.
c. Estimate the average life of patents using the January 2, 2005, patent balance and amorti- zation expense determined in (b). Round to the nearest year.