A patent was purchased for $670,000 with a legal life of 20 years. Management es
ID: 2372656 • Letter: A
Question
A patent was purchased for $670,000 with a legal life of 20 years. Management estimates that the patent has an 12-year economic life. The entry to record amortization would include: a. an increase in research and development expense for $670,000. b. a decrease in patent for $55,833. c. an increase in amortization expense for $33,500. d. an increase in accumulated amortization for $670,000. A patent was purchased for $670,000 with a legal life of 20 years. Management estimates that the patent has an 12-year economic life. The entry to record amortization would include: a. an increase in research and development expense for $670,000. b. a decrease in patent for $55,833. c. an increase in amortization expense for $33,500. d. an increase in accumulated amortization for $670,000.Explanation / Answer
every year the decrease in patent value due to amortization is 670,000/12 = $55,833
b. a decrease in patent for $55,833.