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?

Question

Quizplus · Accepted Answer

The allowable amortization deduction is calculated by dividing the cost of each patent by its useful life. For the first patent: $600,000 / 10 years = $60,000 per year. For the second patent: $300,000 / 10 years = $30,000 per year. Total amortization deduction = $60,000 + $30,000 = $90,000.

On January 1 of the Current Year, Dentux Corp