Geithner LLC patented a process it developed in the current year. The patent is expected to create benefits for Geithner over a 10-year period. The patent was issued on April 15^th and the legal costs associated with the patent were $43,000. In addition, Geithner had unamortized research expenditures of $15,000 related to the process. What is the total amortization expense Geithner may deduct during the current year? A) $2,417 B) $2,174 C) $4,108 D)$4,350 E)None of these

Question

Quizplus · Accepted Answer

The total cost basis for the patent is $58,000 ($43,000 legal costs + $15,000 unamortized research expenditures). Since the patent is expected to create benefits for Geithner over a 10-year period, the annual amortization expense is calculated as $58,000 ÷ 10 = $5,800. However, the patent was issued on April 15th, so the amortization expense for the current year is calculated as follows:

($58,000 ÷ 10) x (9 ÷ 12) = $4,350

Therefore, the total amortization expense Geithner may deduct during the current year is $4,350. Option D is, therefore, correct.

Geithner LLC Patented a Process It Developed in the Current