Paleota Company purchased a patent from Finise for $234,000.At the time of purchase, the patent had a remaining useful life of 10 years.Determine the patent amortization expense for the first year.
A) $23,400
B) $23,000
C) $14,000
D) $9,800

Question

Quizplus · Accepted Answer

The formula for calculating annual patent amortization expense is (Patent Cost - Residual Value) / Useful Life. 
In this case, the cost of the patent is $234,000, and assuming no residual value, the amortization expense for the first year would be ($234,000/10) = $23,400. Therefore, the correct answer is A.

Paleota Company Purchased a Patent from Finise for $234,000