Question
Problem-5) On January 1, 2018, XYZ Corp. purchased a patent for a new consumer product for $ 45,000. At the time of purchase, the patent
Problem-5) On January 1, 2018, XYZ Corp. purchased a patent for a new consumer product for $ 45,000. At the time of purchase, the patent was valid for 15 years. Due to the competitive nature of the product, however, the patent was estimated to have a useful life of only ten years. During 2021, the product was permanently removed from the market because of a potential health hazard. What amount should XYZ recognize as an impairment loss for calendar 2021, assuming amortization has been recorded annually using the straight-line method with no residual value?
Question 5 options:
a)
$ 4,500
b)
$ 27,000
c)
$ 31,500
d)
$ 36,000
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