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Firdavs [7]
3 years ago
8

ELO Corporation purchased a patent for $135,000 on September 1, 2019. It had a useful life of 10 years. On January 1, 2021, ELO

spent $33,000 to successfully defend the patent in a lawsuit. ELO feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2021
Business
1 answer:
LUCKY_DIMON [66]3 years ago
7 0

Answer: $30,000

Explanation:

Amortization from September 1, 2019 - January 1, 2021 :

September 1, - december 31 = 4/12 = 0.333333

(1 + 0.333333) × (135000 × 10) = $18,000

Value left before patent defense :

$(135,000 - 18,000) = $117,000

Amount reported for patent amortization expense 2021:

$(117,000 + 33,000) ÷ 5

$150,000 ÷ 5 = $30,000

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