Rinky-Dink Inc. incurred research and development costs of $210,000 and legal fees of $110,000 to acquire a patent. The patent has a legal life of 20 years and a useful life of 10 years. What amount should the company record as patent amortization expense in the first year?
A) $11,000
B) $16,000
C) $21,000
D) $32,000

Question

Quizplus · Accepted Answer

The correct answer is A.The patent amortization expense in the first year is calculated as follows:Patent amortization expense = (Research and development costs + Legal fees) / Useful life= (210,000 + 110,000) / 10= 320,000 / 10= 32,000Therefore, the company should record $32,000 as patent amortization expense in the first year.