Question

Included in the assets purchase from whole grain foods was a patent valued at 46,800. The original legal life of the patent was 20 years. There are still 17 years left on the patent, but University Hero estimates the patent will be useful for only 9 more years. Record the amortization of the patent at December 31, 2024.

Answer 1

The amortization of the patent valued at $46,800 with an estimated useful life of 9 years would result in an annual amortization expense of $5,200, to be recorded at December 31, 2024.

Step-by-step explanation:

To record the amortization of the patent valued at $46,800 at December 31, 2024, we consider the estimated useful life of the patent from the date of the asset purchase. Although the original legal life of a patent is typically 20 years, University Hero estimates that this patent will be useful for only 9 more years. Therefore, we should use the estimated useful life to calculate amortization. The calculation for one year of amortization is as follows:

Annual amortization expense = Patent value / Estimated useful life

Annual amortization expense = $46,800 / 9 years = $5,200

Since the question asks for the amortization at December 31, 2024, assuming the patent was acquired at the beginning of the year, the amortization expense for the year would be $5,200.