The Western Company, a company that follows IFRS, provided you with the followinginformation about a number of transactions that took place in 2020:1) On January 1, 2020 Western acquired a patent for $45,000 cash. The patent expires onJanuary 1, 2028, but the company determined that it will generate future benefits for 6years from the date of acquisition. During 2022, the total useful life of the patent wasrevised to 4 years.2) During March 2020, The Wester Company invested $120,000 in research costs about anew product that it aims to develop in 2021. The amount was paid in cash.3) The Western Company estimates that its internal goodwill is worth $980,000 in July2020.Required-a) Prepare the journal entries related to the patent from January 1, 2020 to December 31,2022.b) Prepare the journal entries for 2 and 3. If no journal entry is required, justify why.

An intangible asset is an non monetary asset with following three critical attributes:…

Answered: Prepare the journal entries related to…

Prepare the journal entries related to the patent from January 1, 2020 to December 31, 2022. Prepare the journal entries for 2 and 3. If no journal entry is required, justify why.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The Western Company, a company that follows IFRS, provided you with the following
information about a number of transactions that took place in 2020:
1) On January 1, 2020 Western acquired a patent for $45,000 cash. The patent expires on
January 1, 2028, but the company determined that it will generate future benefits for 6
years from the date of acquisition. During 2022, the total useful life of the patent was
revised to 4 years.
2) During March 2020, The Wester Company invested $120,000 in research costs about a
new product that it aims to develop in 2021. The amount was paid in cash.
3) The Western Company estimates that its internal goodwill is worth $980,000 in July
2020.
Required-
a) Prepare the journal entries related to the patent from January 1, 2020 to December 31,
2022.
b) Prepare the journal entries for 2 and 3. If no journal entry is required, justify why.

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