Final answer:
The statement is generally false as the remaining book value of the original patent cannot simply be amortized over the life of the new patent. Each patent is a distinct asset and should be amortized over its own legal or useful life. A patent typically has a life of 20 years from the filing date as prescribed by U.S. law.
Step-by-step explanation:
If a new patent is acquired through modification of an existing patent, the remaining book value of the original patent cannot simply be amortized over the life of the new patent. This is generally false because the accounting treatment must reflect the economic reality of the assets. When the original patent is modified, it essentially becomes a different asset with its own valuation and useful life. According to generally accepted accounting principles (GAAP), the costs to secure and defend patents, including legal fees, are capital expenditures and should be amortized over the shorter of the legal or useful life of the patent.
It is important to note that the life of a patent is typically 20 years from the filing date, according to U.S. law, which means that patents provide a temporary monopoly to encourage innovation and investment in new technologies. However, in a rapidly changing industry, such as biotechnology or semiconductor design, the relevance of patents can diminish quickly as technology advances.