On October 1,2018,Northern Company purchased a patent for $211,000 cash.Although the patent gives legal protection for 20 years,the patent is expected to be used for only 10 years.The patent has no residual value.What will be the balance in the patent account on September 30,2019?

Question

Quizplus · Accepted Answer

Amortization expense = (Cost - Residual value) / Useful life
Amortization expense = ($211,000 - 0) / 10 = $21,100
Balance at the end of first year = $211,000 - $21,100 = $189,900

On October 1,2018,Northern Company Purchased a Patent for $211,000 Cash