On October 1,2017,Nurix,Inc.purchased a patent for $205,000 cash.Although the patent gives legal protection for 20 years,the patent is expected to be used for only 10 years.What will be the balance in the patent account on September 30,2018?

Question

Quizplus · Accepted Answer

Amortization expense = (Cost - Residual value)/ Useful life
Amortization expense = ($205,000 - 0)/ 10 = $20,500
Balance at the end of first year = $205,000 - $20,500 = $184,500