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In: Accounting

On January 2, 2019, Adelphi Company purchased a patent for $185,000 plus $10,000 in legal fees....

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.

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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

ekkarill92 answered 2 years ago
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