Grouper Corporation purchases a patent from Sheridan Company on January 1, 2017, for $46,000. The patent has a remaining legal life of 16 years. Grouper feels the patent will be useful for 10 years. Prepare Grouper's journal entries to record the purchase of the patent and 2017 amortization

We first register the purchase of the patent:

Account Debit Credit

Cash $46,000

Patent $46,000

Now we register the amortization for the first year. Because the useful life is 10 years, then, each year the patent will lose $4,600 of its value ($46,000 / 10 = $4,600)

Account Debit Credit

Amortization $4,600

Patent $4,600