Racer Company Acquired Patent Rights on January 1, 2013 for $1,080,000

Essay

Racer Company acquired patent rights on January 1, 2013 for $1,080,000. The patent has a useful life equal to its legal life of 15 years. On January 2, 2016, Racer successfully defended the patent in a lawsuit at a cost of $78,000.
REQUIRED:
1 Determine the patent amortization expense for the current year ended December 31, 2016.
2 Identify the accounting equation effects of the adjustment to recognize the amortization.
1 $1,080,000/15 + $78,000/12 = $78,500 total patent expense