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Calculate the amount of amortization of the patent

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Reference no: EM132846584

Question - Strawberry Company is in the business of inventing kitchen gadgets. In developing a tool to assist with the dipping of fruit into liquid chocolate, the company incurred the following costs: research & development $50,000, and patent registration costs $1500. Further, the company spent $500,000 to market the device (TV ads, door-to-door flyers, trade shows, etc.). The estimated useful life of the patent is the full 30 years.

15 years after registering the patent, Strawberry Company sells the patent to Apple Inc. for $20,000.

Required -

1. Calculate the amount of amortization of the patent that would be recorded each year on the books of Strawberry Company.

2. Record the journal entry necessary on Strawberry Company's books to show the sale of the patent to Apple Inc. Assume that Apple pays cash for the patent. Show all calculations.

Reference no: EM132846584

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