Question

Johnson Industries acquired a patent on January 2nd, 2015, for $18,000. The patent was estimated to have a useful life of five years. On July 1st, 2017, the company incurred legal fees of $7,500 to successfully defend the patent in an infringement suit. How much amortization expense will Johnson recognize on the Income Statement for the year ended December 31st, 2017

Answer 1

The amortization expense will Johnson recognize on the Income Statement for the year ended December 31st, 2017 is $ 5100.

Step-by-step explanation:

Amortisation Expenses for 2017

So Amortisation on Original Cost: ($18000/5) = $ 3600

Amorisation on legal expenses = $ 1500

(7500 x 6months/ Remaining life(i.e. 30 months)

Total Amortisation Expenses for 2017 = $ 5100

Therefore, The amortization expense will Johnson recognize on the Income Statement for the year ended December 31st, 2017 is $ 5100.