A patent was purchased for $670,000 with a legal life of 20 years. Management es

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.

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