Question
Neo Company acquired a patent on a manufacturing process on December 31, 2012 for $988,000. It was expected to have a 19-year useful life and
Neo Company acquired a patent on a manufacturing process on December 31, 2012 for $988,000. It was expected to have a 19-year useful life and no residual value. Neo Company uses straight-line amortization for patents. On December 31, 2020, the future cash flows expected from the patent are $9,000 per year for the next 11 years. The present value of these cash flows, discounted at Neo Companys market interest rate, is $16,000. At what amount should the patent be carried on Neo Companys December 31, 2020 balance sheet? $99,000 $16,000 $572,000 $988,000
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