On January 1, 2013, Moose Co. purchased for $360,000 a patent that had been granted two years earlier. On January 1, 2015, legal costs of $64,000 were incurred in a successful defense of the patent. Assuming the maximum period allowable is used for patent amortization, what is Moose's patent amortization expense for 2015?

Question

Quizplus · Accepted Answer

The patent is amortized over its remaining legal life of 15 years (17 years total less 2 years before purchase). The initial cost is $360,000, and the legal defense cost of $64,000 is added to the patent's carrying amount, totaling $424,000. The annual amortization expense is $424,000 / 15 = $28,267. However, the question asks for the amortization expense for 2015, which is $424,000 / 17 = $24,941. Since this is not an option, the closest correct choice is $24,000, assuming a rounding or approximation error in the provided options.