On January 15, 2018, a corporation was granted a patent on a product. On January 2, 2020, to protect its patent, the corporation purchased a patent on a competing product that originally was issued on January 10, 2016. Because of its unique plant, the corporation does not feel the competing patent can be used in producing a product. The cost of the competing patent should be

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The cost of the purchased patent should be expensed in 2020 because it cannot be used in producing a product due to the corporation's unique plant. Amortization is only necessary if the asset has a useful life and can generate future economic benefits. Since the competing patent cannot be used by the corporation, there are no future economic benefits, and the cost of the patent should be expensed in the year it was purchased.

On January 15, 2018, a Corporation Was Granted a Patent