Part 1. May flower Printing manufactures high-speed printers. Mayflower Printing Recently paid $9 million for a patent on a new laser printer. Although it gives legal Protection for 20 years, the patent is expected to provide a competitive advantage for only 15 years. Using the straight-line method of amortization, make journal entries to record
(a) The purchase of the patent
(b) Amortization for year 1.
Part 2. After using the patent for 7 years, Mayflower Printing learns at an industry trade show that another company is designing a more efficient printer. On the basis of this new information, Mayflower Printing decides, starting with year 8, to amortize the remaining cost of the patent over 2 remaining years, giving the patent a total useful life of 9 years. Record amortization for year 8.