Broadway Corporation was granted a patent on a product on January 1, 2004.To protect its patent, the corporation purchased on January 1, 2015 a patent on a competing product which was originally issued on January 10, 2011.Because of its unique plant, Broadway Corporation does not feel the competing patent can be used in producing a product.The cost of the competing patent should be
A)amortized over a maximum period of 20 years.
B)amortized over a maximum period of 16 years.
C)amortized over a maximum period of 9 years.
D)expensed in 2015.

Question

Quizplus · Accepted Answer

The competing patent should be amortized over the remaining legal life of the patent, which is 20 years from the original issue date (January 10, 2011). As of January 1, 2015, there are 16 years remaining, so the maximum period for amortization is 16 years. However, since Broadway Corporation does not intend to use the patent, it should be amortized over the period it is expected to provide economic benefits, which is 9 years (from 2015 to 2024, when the original patent expires).

Broadway Corporation Was Granted a Patent on a Product on January