On September 30, 2014, Leeds LTD. acquired a patent in conjunction with the purchase of another company. The patent, valued at $6 million, was estimated to have a 10-year life and no residual value. Leeds uses the straight-line method of amortization for intangible assets. At the beginning of January 2016, Leeds successfully defended its patent against infringement. Litigation costs totaled $500,000. Required: 1. Calculate amortization of the patent for 2014 and 2015. 2. Prepare the journal entry to record the 2016 litigation costs. 3. Calculate amortization for 2016. 4. Repeat requirements 2 and 3 assuming that Leeds prepares its financial statements according to IFRS.
On September 30, 2014, Leeds LTD. acquired a patent in conjunction with the purchase of another company. The patent, valued at $6 million, was estimated to have a 10-year life and no residual value. Leeds uses the straight-line method of amortization for intangible assets. At the beginning of January 2016, Leeds successfully defended its patent against infringement. Litigation costs totaled $500,000. Required: 1. Calculate amortization of the patent for 2014 and 2015. 2. Prepare the
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