Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the patent on a straight-line basis since 2009, when it was acquired at a cost of $15.3 million at the beginning of that year. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life being used to amortize its cost. The decision was made at the end of 2013 (before adjusting and closing entries).

Required:
Prepare the appropriate adjusting entry for patent amortization in 2013 to reflect the revised estimate. (If no entry is required for an event, select "No journal entry required" in the first account field. Enter your answers in millions (i. e., 5,500,000 should be entered as 5.5))

Event General Journal Debit Credit
1 Amortization Expense

Accumulated Amortization $ 0.2 million (debit)

Amortization Expense $ 0.2 million (credit)

Explanation:

Amortization of Intangible Asset = Cost / Useful Life

                                                      = $15,300,000 / 9

                                                      = $1,700,000

The Amortization has been $1,700,000 since 2009

2013

Amortization Charge = $1,700,000

Revised useful life is 6 years instead of 9.

Therefore, Adjust the amortization at beginning as if revision happened at beginning of the year

New Amortization Charge = Carrying Amount as at 2012/ Remaining Useful life

                                           = ($15,300,000 - ($1,700,000×4))/6

                                           = $8,500,000/6

                                           = $1,416,667

Adjusting Journal

Accumulated Amortization $283,333 (debit)

Amortization Expense $283,333 (credit)

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