Prepare the entry to record gordons purchase of the patent

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On January 1, 2009 Gordon Company purchased a patent for $420,000 from an inventor who had developed a new manufacturing process. At the time of the purchase, the patent had a remaining legal life of 10 years.

Using the accounting equation below and T-accounts:

1- Prepare the entry to record Gordon's purchase of the patent.

2- Prepare the entry to record amortization of the patent on 12/31/09.

3- At the end of 2012 after amortization had been recorded through 12/31/2001, Gordon concluded that the estimated future cash flows from the patent

to be $200,000 as required to test for impairment. Record the impairment loss.

Assets = Liabilities +SE +Revenues -Expenses

Reference no: EM131773195

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