On January 1, 20X7 I-Tech Entity (IE) Acquired a Patent

Essay

On January 1, 20X7 I-Tech Entity (IE) acquired a patent that expires in ten years for $150,000 in a business combination. IE expects to produce the patented product for the next six years, discontinuing the product line at the end of that time period. IE has a commitment from Advanced Company (AC) to purchase the patent in six years for 20% of its fair value on the date the patent is acquired. Management believes that the straight-line method of amortization reflects the pattern in which the entity expects to consume the patent's future economic benefits. What is the journal entry IE will record on December 31, 20X7?