Your company pays $620,000 for a patent that has 10 years remaining.Each year,your company should:
A)debit Amortization Expense for $62,000 and credit Accumulated Depreciation for $62,000.
B)debit Intangible assets and credit Accumulated Amortization for an amount equal to 20% of book value.
C)debit Amortization expense for $62,000 and credit Patent for $62,000.
D)report no Amortization Expense because patents are not subject to amortization.

Question

Quizplus · Accepted Answer

Amortization is credited directly to the Patent account;a contra account is not necessary.
Amortization Expense = Cost ÷ Useful Life
Amortization Expense = $620,000 ÷ 10
Amortization Expense = $62,000

Your Company Pays $620,000 for a Patent That Has 10