On January 1,2016,Stiller Company paid $800,000 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,the amount of amortization expense on the December 31,2018 income statement and the book value of the patent on the December 31,2018 balance sheet would be:

Question

Quizplus · Accepted Answer

The patent is amortized over its useful life of 5 years. Annual amortization expense is $800,000 / 5 = $160,000. By December 31, 2018, three years of amortization have occurred, totaling $480,000. The book value is $800,000 - $480,000 = $320,000.

On January 1,2016,Stiller Company Paid $800,000 to Obtain a Patent