Slowpoke Inc. purchased a patent for $82,000 at the beginning of 2016 which the

Question

Slowpoke Inc. purchased a patent for $82,000 at the beginning of 2016 which the company believes has a useful life of only 5 years. Fortunately, the patent has a legal life of 20 years. How much should Slowpoke Inc. record as patent amortization expense in 2016?

a.

$4,100

b.

$5466.67

c.

$16,400

d.

Generally Accepted Accounting Principles (G.A.A.P) do not permit the amortization of patents.

a.

$4,100

b.

$5466.67

c.

$16,400

d.

Generally Accepted Accounting Principles (G.A.A.P) do not permit the amortization of patents.

Explanation / Answer

Patent amortization expense in 2016 = 82000/5= $16400 Option C is correct

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