Question

Gessner LLC patented a process it developed in the current year. The patent is expected to create benefits for Gessner over a 10-year period. The patent was issued on April 15th and the legal costs associated with the patent were $43,000. In addition, Gessner had unamortized research expenditures of $15,000 related to the process. What is the total amortization expense Gessner may deduct during the current year?

Answer 1

Answer:

$4,350

Explanation:

Based on the amortization period, the duration of the patent would be 20 years or 10 years whichever is lower. So, in this question, we consider the useful life of 10 years

The computation is shown below:

= (Legal  costs associated with the patent + unamortized research expenditures) ÷ useful life in months × given months

= ($43,000 + $15,000) ÷ 120 months × 9 months

= $58,000 ÷ 120 months × 9 months

= $4,350

The nine months is calculated from April to December month. We assume that the books are closed on December month