Razor Company
Required Debit Credit
2020
Jan-01 Patent 255,000
Cash 255,000
Dec-31 Amortization of patent 12,750
Patent (255,000/20) 12,750
2021
Dec-31 Amortization of patent 12,750
Patent 12,750
2022
Jan-05 Legal expense 90,000
Cash 90,000
Dec-31 Amortization of patent 12,750
Patent 12,750
2023
Jan-01 Patent 510,000
Cash 510,000
Dec-31 Amortization of patent 42,750
Patent 42,750
On original cost 12,750
On competing patent (510,000/17) 30,000
42,750
Blade Company
Required Debit Credit
2020
Research and development expense 510,000
Cash 510,000
2023 Patent 720,000
Cash 720,000
Amortization of patent (720,000/16) 45,000
Patent 45,000
2024 Patent 540,000
Cash 540,000
Amortization of patent 81,000
Patent 81,000
On related patent 45,000
On competing patent (540,000/15) 36,000
81,000
Crystal Company
Required Debit Credit
2020
Research and development expense 250,000
Cash 250,000
2021
Patent 60,000
Cash 60,000
Amortization of patent 6,000
Patent (60,000/10) 6,000
2022
Patent 600,000
Cash 600,000
Original cost 60,000
New patent 600,000
Total cost 660,000
Less: Amortization for 2021 6,000
Carrying amount-January 1, 2022 654,000
Amortization of patent (654,000/15) 43,600
Patent 43,600
2023
Amortization of patent 43,600
Patent 43,600
Patent written off 566,800
Patent 566,800
Carrying amount-1/1/2022 654,000
Less: Amortization
2021 43,600
2022 43,600 87,200
Carrying amount- 12/31/2023 566,800
Toxic Company
Required1 Debit Credit
Patent 7,140,000
Cash 7,140,000
Required2
Amortization of patent 476,000
Patent (7,140,000/15) 476,000
Required3
Amortization of patent 816,000
Patent (5,712,000/7) 816,000
Required4
Acquisition cost 7,140,000
Amortization for 2020, 2021 and 2022 (476,000 x 3) -1,428,000
Carrying amount-1/1/2023 5,712,000
Amortization for 2023 -816,000
Carrying amount-12/31/2023 4,896,000
Arabian Company
Required1 Debit Credit
Patent 900,000
Cash 900,000
Required2
Amortization of patent 90,000
Patent (900,000/10) 90,000
Required3
Patent written off 540,000
Patent 540,000
Cost 900,000
Amortization for 2020, 2021, 2022 and 2023 (90,000 x 4) -360,000
Carrying amount- 12/31/2023 540,000
Erudite Company
Required Debit Credit
Patent 6,200,000
Cash 6,200,000
Legal expenses C 450,000
ash 450,000
Amortization of patent 1,050,000
Patent 1,050,000
X (1,200,000/8) 150,000
Y (2,000,000/5) 400,000
Z (3,000,000/6) 500,000
1,050,000
Apple Company
Required Debit Credit
1 Retained earnings 500,000
Patent 500,000
2 Patent 510,000
Retained earnings 510,000
3 No adjustment.
4 Loss on damages 100,000
Legal expense 30,000
Accrued liabilities 130,000
5 Patent 24,500
Retained earnings 24,500
Amortization per book (500,000-450,000) 50,000
Correct amortization for 2020 (510,000/20) 25,500
Overamortization 245,000
6 Amortization of patent 25,500
Patent 25,500
Ignoble Company
Required Debit Credit
1 Amortization of patent 280,000
Accumulated amortization (1,920,000-240,000/6) 280,000
2 Trademark (800,000 x 3/4) 600,000
Noncompetition agreement 200,000
Cash 800,000
3 Amortization of noncompetition agreement 40,000
Accumulated amortization (200,000/5) 40,000
4 Royalty expense 50,000
Cash 50,000
Sanity Company
Required Debit Credit
2020 Copyright 285,000
Cash 285,000
Amortization of copyright 150,000
Copyright 150,000
285,000/95,000 = 3 per copy
50,000 x 3 = 150,000
2021 Amortization of copyright 90,000
Copyright (30,000 x 3) 90,000
Steady Company
Required1 Debit Credit
Copyright 240,000
Retained earnings 240,000
Cost of copyright 300,000
Less: Amortization (300,000/5) 60,000
Carrying amount 240,000
Required2
Amortization of copyright 60,000
Copyright 60,000
Center Company
Required1 Debit Credit
Copyright 620,000
Patent 400,000
Retained earnings 1,020,000
Copyright 1 400,000
Less: Amortization from 1/1/2015 to 12/31/2018 (400,000/20 x 4) 80,000
Carrying amount 320,000
Copyright 2 360,000
Less: Amortization from 7/1/2016 to 12/31/2018 (360,000/15 x 2.5) 60,000
Carrying amount 300,000
Patent 500,000
Less: Amortization for 2017 and 2018 (500,000/10 x 2) 100,000
Carrying amount 400,000
Required2
Amortization of copyright (20,000+ 24,000) 44,000
Amortization of patent 50,000
Copyright 44,000
Patent 50,000
Staple Company
Required; Books of Franchise Debit Credit
1 Franchise 6,000,000
Cash 6,000,000
2 Amortization of franchise 300,000
Franchise (6,000,000/20) 300,000
3 Cash 25,000,000
Sales 25,000,000
4 Franchise fee expense 1,250,000
Cash (25,000,000 x 5%) 1,250,000
Outlandish Company
Required; Books of Franchise Debit Credit
1 Franchise 20,000,000
Cash 5,000,000
Note payable 15,000,000
2 Note payable (15,000,000/4) 3,750,000
Interest expense (15,000,000 x 10%) 1,500,000
Cash 5,250,000
3 There is no amortization because the franchise is for an indefinite period.
Doomsday Company
Required; Books of Franchise Debit Credit
1 Franchise (3,000,000+3,790,000) 6,790,000
Discount on note payable 1,210,000
Cash 3,000,000
Note payable 5,000,000
Note payable 5,000,000
Present value of note (1,000,000 x 3.79) 3,790,000
Implied interest 1,210,000
2 Amortization of franchise 679,000
Franchise (6,790,000/10) 679,000
3 Note payable 1,000,000
Cash 1,000,000
4 Interest expense (10% x 3,790,000) 379,000
Discount on note payable 379,000
