FIFA Footballs acquired a patent in 2013 at a cost of $150 million and amortizes the patent on a straight-line basis.During 2016 management decided that the benefits from the patent would be received over a total period of 8 years rather than the 20-year legal life being used to amortize the cost.FIFA's 2016 financial statements should include:

Question

Quizplus · Accepted Answer

Since management has decided to change the useful life of the patent, the remaining useful life will be 8 years instead of the original 20 years. Therefore, the remaining unamortized cost of the patent would be $102 million, which is calculated as follows: 
$150 million / 20 years * (20-4) years = $102 million. The 4 years have been amortized up to 2016. Therefore, FIFA's 2016 financial statements should include a patent balance of $102 million.

FIFA Footballs Acquired a Patent in 2013 at a Cost