On January 1,Year 1,Stiller Company paid $80,000 to obtain a patent.Stiller expected to use the patent for 5 years before it became technologically obsolete.The remaining legal life of the patent was 8 years.Based on this information,what is the amount of amortization expense during Year 3 and the book value of the patent as of December 31,Year 3,respectively?

Question

Quizplus · Accepted Answer

Patents are amortized over the shorter of their legal or useful lives.
Year 4 Amortization expense = Cost of $80,000 ÷ 5 years = $16,000
Book value at end of Year 4 = Cost of $80,000 - Amortization to-date of ($16,000 × 3 years)= $32,000

On January 1,Year 1,Stiller Company Paid $80,000 to Obtain a Patent.Stiller