ABS Broadcasters Ltd owns a standard patent that cost $1 million that was acquired in 2013 and also a datacasting transmitter licence that cost $60 million and that was acquitted in 2007. What decline in value can ABS Broadcasters Ltd claim for these two items of intangible property for the year ended 30 June 2020?

Question

Quizplus · Accepted Answer

The decline in value (amortization) of intangible assets like patents and licences can be calculated based on their useful life. Assuming the standard patent has a useful life of 20 years, its annual amortization would be $1 million / 20 = $50,000. Assuming the datacasting transmitter licence has a useful life of 15 years, its annual amortization would be $60 million / 15 = $4 million. For the year ended 30 June 2020, the total decline in value would be $50,000 (patent) + $4 million (licence) = $4,050,000.

ABS Broadcasters Ltd Owns a Standard Patent That Cost $1