On January 1 of the current year,Dentux Corp.purchases a patent from another corporation for $600,000.The patent has a remaining life of 10 years.The patent is the only asset purchased from that corporation.Also on January 1,Dentux purchases all of the assets of Fenton Corp.Included in the Fenton assets acquired is a patent worth $300,000 that has a 10-year remaining life.What is the allowable amortization deduction on the two patents?
A)$60,000
B)$90,000
C)$80,000
D)$160,000

Question

Quizplus · Accepted Answer

The patent purchased from the other corporation for $600,000 can be amortized over its remaining life of 10 years at a rate of $60,000 per year.

The patent acquired from Fenton Corp with a value of $300,000 and a remaining life of 10 years can also be amortized at a rate of $30,000 per year.

Therefore, the total allowable amortization deduction for the two patents is $60,000 + $30,000 = $80,000.

On January 1 of the Current Year,Dentux Corp