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Company Corp. has purchased a machine. The following information pertains costs related to the purchase...

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Accounting

Company Corp. has purchased a machine. The following information pertains costs related to the purchase of this machine. Use an Excel spreadsheet to prepare journal entries and move amounts to the general ledger.

1) On 1/1, the company finishes developing a patent (patent 1). The company incurs $150,000 in costs to develop the patent. Legal and filing fees for the patent are $2,000. The legal and useful life of this patent is 10 years.

2) On 6/30, company purchases a patent (patent 2) for $600,000. The legal life of this patent is 10 years, but the useful life is expected to be 5 years.

3) On 12/31, the fair market value of the first patent is $200,000 and the fair market value of the second patent is $200,000. The total expected future cash flows for the first patent is $110,000 and the total future cash flow for the second patent is $300,000. Prepare the amortization and impairment entries as necessary.

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