Amortization accounting problem?

[merla15]

Greenleaf Company acquired patent rights on January 6, 2009, for $300,000. The patent has a useful life equal to its legal life of 12 years. On January 3, 2012, Greenleaf successfully defended the patent in a lawsuit at a cost of $72,000.


a. Determine the patent amortization expense for the current year ended December 31, 2012
b. Journalize the entry

I tried: Adding 300000+72000=372000/9=41333 and the computer program is telling me that is incorrect. What else could it be?


Please help explain. thank you

[langford59]

You've almost got it. You add the 72,000 to the book value of the patent, not the original cost.
300,000 / 12 = 25,000 amortization per year, for the first three years. At the end of three years, the book value of the patent is 225,000. The cost of defending the patent was 72,000, which is added to the patent account. The book value is now 297,000, with nine years remaining on the useful life.
297,000 / 9 = 33,000

Dr Patent Amortization 33,000
Cr Patents 33,000