During the first half of 2006, Hi-Def Electronics Company spent $450,000 on research and development efforts that resulted in a new product invention. During June, Hi-Def incurred $50,000 to prepare a patent application and an additional $10,000 for legal fees associated with a patent search, resulting in a pending patent award on July 1, 2006. Management expects the patent to have a life of 12 years. During December 2006, the patent was successfully defended in a legal proceeding which cost $149,500.
a. Record the year-end adjusting journal entry for patent amortization on December 31,
2006.
b. Determine the patent book value on December 31, 2006.
c. Record the year-end adjusting journal entry for patent amortization on December 31, 2007.