The cost of a patent should be amortized
A)over 20 years.
B)over its economic life.
C)over 20 years or its economic life,whichever is shorter.
D)only if an impairment occurs.

Question

Quizplus · Accepted Answer

The cost of a patent should be amortized over either 20 years or its economic life, whichever is shorter. This is because patents have a limited lifespan and may become obsolete or lose their economic value before 20 years have passed. Therefore, the shorter time period should be used to ensure proper matching of expenses and revenues. The option of amortizing only if an impairment occurs (Option D) is incorrect because impairment is a separate issue that applies to assets that have already been amortized, and the cost of a patent should be amortized regardless of whether an impairment has occurred.

The Cost of a Patent Should Be Amortized