A company purchases a patent for $40,000.The patent will be amortized over 5 years.The entry to record the amortization in the first year is:

Question

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The best choice is C because the patent cost of $40,000 is divided by its useful life of 5 years, resulting in an annual amortization expense of $8,000. The entry to record the first year's amortization will be to debit Amortization Expense, Patents for $8,000 and credit Patents for $8,000. Option A is incorrect because it records the purchase of the patent, not the amortization expense. Option B is incorrect because it debits the amortization expense account instead of crediting it. Option D is incorrect because it does not account for the full amortization expense for the year.

A Company Purchases a Patent for $40,000