1. Miracle Printers purchased for $700,000 a patent for a new laser printer. Although the patent gives legal protection for 20 years, it is expected to provide Miracle Printers with a competitive advantage for only eight years. Assuming the straight-line method of amortization, make journal entries to record
(a) The purchase of the patent
(b) Amortization for year 1.
2. After using the patent for four years, Miracle Printers learns at an industry trade show that Speedy Printers is designing a more-efficient printer. On the basis of this new information, Miracle Printers determines that the patents total useful life is only six years.
Record amortization for year 5.