Answer:
The carrying value of the patent on X company on December 31 is $122,000
Explanation:
Computing the carrying value of the patent is as:
The total cost of the patent which will be recognized is as:
Total cost of patent = Purchased cost + Attorney value
where
Purchase cost is $145,000
Attorney cost will be divided into 2, so
Attorney cost = $15,000 / 2
= $7,500
So,
Total cost of patent = $145,000 + $7,500
Total cost of patent = $152,500
Now, amortize the patent over the useful life of patent as:
Amortize value = Patent cost / Useful life
Amortize value = $152,500 / 10
Amortize value = $15,250
But X held the patent for 2 years, so its accumulated amortization is:
Accumulated amortization = Amortize value × 2
= $15,250 × 2
Accumulated amortization = $30,500
Now, the carrying value will be:
Carrying value = Total cost of patent - Accumulated depreciation
Carrying value = $152,500 -$30,500
Carrying value = $122,000
