Flounder Corporation purchases a patent from Pharoah Company on January 1, 2017, for $80,000. The...
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Flounder Corporation purchases a patent from Pharoah Company on January 1, 2017, for $80,000. The patent has a remaining legal life of 16 years. Flounder feels the patent will be useful for 10 years. Assume that at January 1, 2019, the carrying amount of the patent on Flounders books is $64,000. In January, Flounder spends $32,800 successfully defending a patent suit. Flounder still feels the patent will be useful until the end of 2026.
Prepare the journal entries to record the $32,800 expenditure and 2019 amortization.
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