Question

A company purchases a patent for $50,000. The patent will be amortized over five years. The entry to record the amortization in the first year is which of the following?

Answer 1

Debit Amortization of patent's $10,000; credit patents $10,000. I took a course like this before

Answer 2

Answer:

DR Amortization expense $10,000

CR Accumulated Amortization $10,000.

Explanation:

The patent cost is being amortized over five years

Using straight line method, annual amortization = $50,000/5 =$10,000

The entries in the first year include :

DR Amortization expense $10,000

CR Accumulated Amortization $10,000.