Question

Thompson Company incurred research and development costs of $100,000 and legal fees of $30,000 to acquire a patent. The patent has a legal life of 20 years and a useful life of 10 years. What amount should Thompson record as Patent Amortization Expense in the first year?a. 0b. 3,000c. 6,500d. 13,000

Answer 1

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Option 3000 is the answer to your question.

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Answer 2

Answer:

b. 3,000

Explanation:

The computation of the  Patent Amortization Expense in the first year is shown below:

= Legal fees to acquire a patent ÷ estimated useful life

= $30,000 ÷ 10 years

= $3,000

Only the legal expense would be amortized in a year.

And, the lesser period of legal life i.e 20 years and useful life i.e 10 years would be taken in the computation part. So, the lesser time period would be considered i.e useful life of 10 years