Question
Contreras Corporation acquired a patent on May 1, 2015. Contreras paid cash of $25,000 to the seller. Legal fees of $900 were paid related to
Contreras Corporation acquired a patent on May 1, 2015. Contreras paid cash of $25,000 to the seller. Legal fees of $900 were paid related to the acquisition. What amount should be debited to the patent account?
a. $900
b. $24,100
c. $25,000
d. $25,900
In January, 2010, Findley Corporation purchased a patent for a new consumer product for $840,000. At the time of purchase, the patent was valid for fifteen years. Due to the competitive nature of the product, however, the patent was estimated to have a useful life of only ten years. During 2015 the product was permanently removed from the market under governmental order because of a potential health hazard present in the product. What amount should Findley charge to expense during 2015, assuming amortization is recorded at the end of each year?
a. $560,000.
b. $420,000.
c. $84,000.
d. $56,000.
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