CHAPTER 34

Problem 34-4
Date Particulars Debit Credit
2023
Jan. 1 Patent 255,000
Cash 255,000
To record the cost of licensing the patent

Dec. 31 Amortization of patent (255,000/20) 12,750

Patent 12,750
To record the amortization of patent

2024
Dec. 31 Amortization of patent 12,750
Patent 12,750
To record the amortization of patent

2025
Jan. 1 Legal expenses 90,000
Cash 90,000
To record the cost of successful defense of the patent

Dec. 31 Amortization of patent 12,750

Patent 12,750
To record the amortization of patent

2026
Jan. 1 Patent 510,000
Cash 510,000
To record for the acquisition of competing patent

Dec. 31 Amortization of patent (716,750/17) 42,750

Patent 42,750
To record the amortization of patent

Cost (255,000 + 510,000) 765,000

Less: Accumulated amortization (12,750 x 3) - 2026 38,250
Carrying amount - Jan. 1, 2026 716,750

Problem 34-5

Date Particulars Debit Credit

2023
July 1 Development expenses 510,000
Cash 510,000
To record the development of patent

2026
Jan. 1 Patent 720,000
Cash 720,000
Acquisition of related patent

Dec. 31 Amortization of patent (720,000/16) 45,000

Patent 45,000
 2027
Jan. 1 Patent 540,000
Cash 540,000
Acquisition of competing patent

Dec. 31 Amortization of patent (1,215,000/15) 81,000

Patent 81,000
To record for amortization of patent

Cost (720,000 + 540,000) 1,260,000

Less: Amortization - 2026 45,000
Carrying amount - Jan. 1, 2027 1,215,000

Problem 34-6

Date Particulars Debit Credit

2023 Research and development expense 250,000
Cash 250,000
To record the development of patent

2024
Jan. 1 Patent 60,000
Cash 60,000
To record the cost of licensing the patent

Dec. 31 Amortization of patent (60,000/10) 6,000

Patent 6,000
To record the amortization of patent

2025
Jan. 1 Patent 600,000
Cash 600,000
Acquisition of new patent

Cost (600,000 + 60,000) 660,000

Less: Amortization - Dec. 31, 2024 6,000
Carrying amount - Jan. 1, 2025 654,000

Useful life 10
Less: Age of patent 1
Remaining useful life 9
Add: Additional useful life 6
15
Dec. 31 Amortization of patent (654,000/15) 43,600
Patent 43,600
To record the amortization of patent

2026
Dec. 31 Amortization of patent 43,600
Patent 43,600
To record the amortization of patent

Patent write-off 566,800

 Patent 566,800
To write-off the patent account

Cost 660,000
Less: Accumulated Amortization of patent (6,000 + 43,600 + 93,200
43,600) - 2026
Carrying amount - Dec. 31, 2026 566,800

Problem 34-7 (NOT SURE)

Date Particulars Debit Credit
2023
Jan. 1 Patent 900,000
Cash 900,000
Acquisition of patent

Dec. 31 Amortization of patent (900,000/15) 60,000

Patent 60,000
To record the amortization of patent

2024
Dec. 31 Amortization of patent 60,000
Patent 60,000
To record the amortization of patent

2025
Dec. 31 Amortization of patent 60,000
Patent 60,000
To record the amortization of patent

2026
Dec. 31 Amortization of patent (720,000/7) 102,857
Patent 102,857
To record the amortization of patent

Cost 900,000
Less: Accumulated amortization (60,000 x 3) - 2025 180,000
Carrying amount - Jan. 1, 2026 720,000

Patent write-off
Patent
To write-off the patent account

Carrying amount - Dec. 31, 2026 720,000

Less: Amortization - 2026 102,857
Carrying amount - Dec. 31, 2026 617,143

OR (mas right)
Date Particulars Debit Credit
2023
Jan. 1 Patent 900,000
Cash 900,000
Acquisition of patent
 Dec. 31 Amortization of patent (900,000/10) 90,000
Patent 90,000
To record the amortization of patent

2024
Dec. 31 Amortization of patent 90,000
Patent 90,000
To record the amortization of patent

2025
Dec. 31 Amortization of patent 90,000
Patent 90,000
To record the amortization of patent

2026
Dec. 31 Amortization of patent (630,000/7) 90,000
Patent 90,000
To record the amortization of patent

Cost 900,000
Less: Accumulated amortization (90,000 x 3) - 2025 270,000
Carrying amount - Jan. 1, 2026 630,000

Patent write-off 540,000

Patent 540,000
To write-off the patent account

Carrying amount - Dec. 31, 2026 630,000

Less: Amortization - 2026 90,000
Carrying amount - Dec. 31, 2026 540,000

Problem 34-8
Date Particulars Debit Credit
1 Research and development expense 500,000
Patent 500,000
To record adjust the patent account

2 Patent 510,000
Retained 510,000
To record adjust the patent account

3 No entry

4 Loss on damages 100,000

Legal expense 30,000
Accrued liabilities 130,000
To record payment for the balance on legal expense

5 Patent 24,500
Retained earnings 24,500
To adjust the patent account

Amortization of patent 25,500

 Patent 25,500
To record the amortization of patent

Amortization of patent per book (500,000 - 450,000) 50,000

Correct amortization (510,000/20) 25,500
Overstated of amortization 24,500

Problem 34-9
Date Particulars Debit Credit
2023
Jan. 1 Trademark (3/4 x 800,000) 600,000
Cash 600,000
Acquisition of trademark

Non-competition expense (1/4 x 800,000) 200,000

Cash 200,000
To record for non-competition agreement

Royalty expense 50,000

Cash 50,000
Payment of the royalty

Dec. 31 Amortization of patent (1,680,000/6) 280,000

Patent 280,000
To record the amortization of patent

Cost 1,920,000
Less: Accumulated amortization - 2022 240,000
Carrying amount - Jan. 1, 2023 1,680,000

Amortization of non-competition agreement (200,000/) 40,000

Accumulated amortization 40,000
To record the amortization of non-competition
agreement

Problem 34-10
1.
Date Particulars Debit Credit
2023 Patent 400,000
Copyright 1 320,000
Copyright 2 300,000
Retained earnings 1,020,000
To record adjustments

Cost - Copyright 1 400,000

Less: Accumulated amortization (400,000/20 x 4) - 2022 80,000
Carrying amount - Jan. 1, 2023 320,000

Cost - Copyright 2 360,000

Less: Amortization (360,000/15 x 2.5) - 2020 60,000
Carrying amount - Jan. 1, 2023 300,000

Patent 500,000
 Less: Accumulated amortization (500,000/10 x 2) - 2022 100,000
Carrying amount - Jan. 1, 2023 400,000

2.
Date Particulars Debit Credit
2023 Amortization of patent (400,000/8) 50,000
Patent 50,000
To record amortization for patent

Amortization of Copyright 1 (320,000/16) 20,000

Copyright 1 20,000
To record amortization for Copyright 1

Amortization of Copyright 2 (300,000/12.5) 24,000

Copyright 2 24,000
To record amortization for Copyright 2

Problem 34-11
Date Particulars Debit Credit
2023
Jan. 1 Franchise 6,790,000
Discount on note payable 1,210,000
Cash 3,000,000
Notes payable 5,000,000

Face amount 5,000,000

PV (1,000,000 x 3.79) 3,790,000
Discount on note payable 1,210,000

pv 3,790,000
Add: cash paid 3,000,000
Cost of the franchise 6,790,000

Dec. 31 Note payable 1,000,000

Cash 1,000,000
Annual payment

Interest expense (3,790,000 x 10%) 379,000

Discount on note payable 379,000
Amortization of discount

Amortization of franchise (6,790,000/10) 679,000

Franchise 679,000
To record for amortization of franchise

Franchise fee expense (10,000,000 x 5%) 500,000

Cash 500,000
Payment of periodic fee

Problem 34-12
Cost 6,000,000
Less: Accumulated amortization (6,000,000/15 x 5) 2022 2,000,000
Carrying amount - Jan. 1, 2023 4,000,000
Divided by revised useful life 5
Amortization - 2023 800,000

Problem 34-13
Cost 4,500,000
Divided by remaining useful life 10
Amortization - 2023 450,000

Problem 34-14
Cost 450,000
Less: Accumulated amortization (450,000/15 x 3) - 2022 90,000
Carrying amount - Jan. 1, 2023 360,000

Sale price 750,000

Less: Carrying amount 360,000
Gain from sale of patent 390,000

Problem 34-15
Cost 5,400,000
Less: Accumulated amortization (5,400,000/6 x 2) - 2022 1,800,000
Carrying amount - Jan. 1, 2023 3,600,000
Divided by revised useful life 20
Amortization - 2023 180,000

Problem 34-16
1.
Cost 7,140,000
Less: Accumulated amortization (7,140,000/15 x 3) - 2025 1,428,000
Carrying amount - Jan. 1, 2026 5,712,000
Divided by Revised remaining useful life 7
Amortization - 2026 816,000

2.
Carrying amount - Jan. 1, 2026 5,712,000
Less: Amortization - 2026 816,000
Carrying amount - Dec. 31, 2026 4,896,000

Problem 34-17
Legal cost 150,000
Fees paid to government patent office 50,000
Drawings for patent application 40,000
Cost of patent 240,000

Problem 34-18
Design cost 1,500,000
Legal fees 150,000
Registration fee 50,000
Initial cost of trademark 1,700,000

Problem 34-19
Purchase price 1,000,000
Non-refundable vat 50,000
Legal cost 105,000
Initial cost of the trademark 1,155,000

Problem 34-20
Cash paid 2,000,000
Add: Present value (1,000,000 x 2.91) 2,910,000
Initial cost of the franchise 4,910,000

Problem 34-21
Travel cost 400,000
Add: Training cost 1,200,000
Organizational expenses 1,600,000

Problem 34-22
Leasehold improvements 3,600,000
Divided by remaining useful life of lease 6
Depreciation - 2023 600,000

Problem 34-23
Leasehold improvements 1,200,000
Divided by useful life of lease 8
Depreciation - 2023 150,000

Problem 34-24
Leasehold improvement 540,000
Divided by useful life of improvement 15
Depreciation - 2023 36,000

Leasehold improvement - Jan. 1, 2023 540,000

Less: Depreciation - 2023 36,000
Leasehold improvement - Dec. 31, 2023 504,000

Problem 34-25
Sales office 470,000
Divided by useful life 10
Depreciation - 2023 47,000

Warehouse 750,000
Divided by useful life lease 10
Depreciation - 2023 75,000

Warehouse 180,000
Divided by useful life improvement 10
Depreciation - 2023 18,000

Depreciation of leasehold improvements - 2023

(47,000 + 75,000 + 18,000) 140,000