Broadway Corporation was granted a patent on a product on January 1, 2007. To protect its patent, the corporation purchased on J
anuary 1, 2018 a patent on a competing product which was originally issued on January 10, 2014. Because of its unique plant, Broadway Corporation does not feel the competing patent can be used in producing the product. The cost of the competing patent should be
(A) amortized over a maximum period of 20 years.
(B) amortized over a maximum period of 16 years.
(C) amortized over a maximum period of 9 years.
(D) expensed in 2018.
(A) amortized over a maximum period of 20 years.
(B) amortized over a maximum period of 16 years.
(C) amortized over a maximum period of 9 years.
(D) expensed in 2018.
1 answer:
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Answer:
$1,500
Explanation:
Given the compounding formula
And given an investment (P), made at 16% compounded annually (r), and an ending amount of $1,740 (A) at the end of the year (n = 1 year), the original amount invested (P) can be computed as follows.
= P = 1,740/1.16 = 1,500.
Therefore, the original investment was $1,500.