Conrad Inc. purchased a patent for $2,900,000 for "a specialty line of patented switch plate covers and outlet plate covers specifically designed to light up automatically when the power fails." Assume the switch plate patent was purchased January 1, 2020, and it is being depreciated over a period of ten years. Assume that Conrad Inc. does not use an accumulated amortization account but instead charges amortization directly against the intangible asset account. Required: 1. This part of the question is not part of your Connect assignment. 2. Prepare the journal entries to record the purchase and amortization of the switch plate patent in 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 3. After a year of unsuccessful attempts to manufacture the switch plate covers, Conrad Inc. determined the patent was significantly impaired and its book value on January 1, 2020, was written off. Prepare the journal entry to record the impairment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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