Answer:
C) Patent amortization expense of $5 million.
Explanation:
Patent acquisition date is 2010
Cost of acquisition = $50 million
Initial Useful life = 20 years
Annual amortization = $50,000,000/20
= $2,500,000
Between 2010 and start of 2013 is 3 years
Carrying value at the start of 2013
= 50,000,000 - 3(2,500,000)
= $42,500,000
If patent would be received over a total period of 8 years rather than the 20-year legal life being used to amortize the cost,
Patent amortization expense in 2013 = $42,500,000/8
= $5,312,500
This can be estimated as $5 million.
The right option is C) Patent amortization expense of $5 million.
