A company purchased a patent for $100,000 at the beginning of 2012 which it believes has an expected useful life of 5 years.Fortunately,the patent has a legal life of 20 years.How much amortization expense should be recorded in 2012?
A)$0
B)$5,000
C)$20,000
D)$100,000

Question

Quizplus · Accepted Answer

The amortization expense should be calculated using the straight-line method, which means dividing the cost of the patent by its expected useful life.
Therefore, amortization expense per year will be $100,000 / 5 = $20,000.
Hence, the correct answer is option C, which is $20,000.

A Company Purchased a Patent for $100,000 at the Beginning