On January 1, Blue Manufacturing paid $ 30 comma 000 for a patent. Although it gives legal protection for 20 years, the patent is expected to provide a competitive advantage for only five years. Assuming the straight-line method of amortization, record the journal entry for amortization for Year 1.

Amortization expense $6,000

To Patent $6,000

(Being the amortization expense is recorded)

Explanation:

The journal entry is shown below:

Amortization expense $6,000

To Patent $6,000

(Being the amortization expense is recorded)

The computation is shown below:

= Paid amount : number of years

= $30,000 : 5 years

= $6,000

While recording this transaction we debited the amortization expense as it increased the expenses account and credited the patent account as it decreased the asset account