In: Accounting
On January 2, 2019, Adelphi Company purchased a patent for $185,000 plus $10,000 in legal fees. On that date, the patent had a remaining legal life of 13 years. Adelphi Company expects to use the patent for 7 years after which time it will be worthless. How much is the annual amortization expense for 2019? Round to nearest whole dollar.
Answer:
Amortization of the patent is done on the basis of useful life of the patent. | ||
CALCULATION OF THE AMORTIZATION AS PER STRAIGHT LINE METHOD PER YEAR | ||
Purchase Cost of patent ($ 185000+ $ 10000) | $ 195000 | |
Less: Salvage Value | $ - | |
Net Value for Amortization | $ 195000 | |
Usefule life of the Patent | 7 | Years |
Amortization per year = Value for Amortization / 7 years = | $ 27857 | |
Amortization per year = | $ 27857 | |
Answer = Amortiation expenses of the year 2019 = $ 27857 | ||