On January 1, 20x1, SPARSE Co. purchased a patent from THINLY SPREAD, Inc. for 400,000. THINLY SPREAD has held this patent for 5 years. SPARSE estimates that the patent has a remaining useful life of 8 years.

8. How much is the patent amortization in 20x1?

a. 80,000b. 50,000 c. 266,667 d. 20,000

9. On January 1, 20x3, SPARSE Co. purchased a competitive patent from MEAGER Corp. for 180,000 in order to protect the old patent. The competitive patent has a remaining legal life and useful life of 20 years. How much is the total amortization expense in 20x3?

a. 50,000b. 80,000 c. 133,367 d. 42,500

10. On January 1, 20x4, SPARSE incurred litigation costs of 80,000 in an unsuccessful defense of the patents held. How much is the total expense recognized in 20x4?

a. 80,000b. 160,000 c. 523,667d. 480,000