A company purchases a patent for $44,000. The patent will be amortized over 5 years. The entry to record the amortization in the first year is:

Question

Quizplus · Accepted Answer

The correct entry to record the first year's amortization of the patent is to debit Amortization Expense for $8,800 and credit Patents for $8,800. This is because the $44,000 cost of the patent is being spread evenly over 5 years, resulting in an annual amortization expense of $8,800 ($44,000 / 5 years).

A Company Purchases a Patent for $44,000