Pocono Co.purchased a patent at the beginning of 2017 for $490,000.Economic benefits were expected for seven years,but the patent's legal life was 20 years.Also,during 2017,the company incurred research and development costs of $150,000.Patent amortization expense for 2017 is
A)$24,500.
B)$150,000.
C)$72,143.
D)$70,000.

Question

Quizplus · Accepted Answer

The patent should be amortized over its economic life of 7 years, not its legal life. Therefore, the annual amortization expense is $490,000 / 7 = $70,000.

Pocono CoPurchased a Patent at the Beginning of 2017 for $490,000