On January 1, 2010, Cooseck Co.purchased for $360, 000 a patent that had been granted two years earlier.On January 1, 2012, legal costs of $64, 000 were incurred in a successful defense of the patent.Assuming the maximum period allowable is used for patent amortization, what is Cooseck's patent amortization expense for 2012?

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Quizplus · Accepted Answer

The patent is amortized over its legal life of 20 years from the grant date. Since it was granted two years before purchase, it has 18 years remaining. The total cost of the patent is $360,000 + $64,000 = $424,000. The annual amortization expense is $424,000 / 18 = $23,555.56, rounded to $24,000.