Problem
On June 1, 2017, DeeDee recorded a patent in the amount of $250,000. The company paid outside legal fees of $120,000 to have the patent registered. The other $130,000 represents internal costs in developing the patent. The patent is good for 20 years, but the company estimates that the patent will have a useful life of 8 years with no residual value. No one knows what to do with this information so no amortization has been recorded for 2017. Amortization is the straight line and the company depreciates using partial years for intangible assets.
a. What is the adjusting entry for the patent?
b. What is the Amortization Expense using straight line method?
c. How do we use partial years for depreciation?