Holze Music Company purchased for $600,000 a patent for a new sound system. Although the patent gives legal protection for 20 years, it is expected to provide Holze with a competitive advantage for only 6 years. Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for year 1.
(Part 2.) After using the patent for 2 years, Holze learns at a professional meeting that BOSE is designing a more powerful system. On the basis of this new information, Holze determines that the patent's total useful life is only 4 years. Record amortization for year 3.