Question

On January 4 of year 1 a patent was acquired for $250,000 and is expected to have value for 10 years. On January 6 of year 6, legal costs incurred to defend the patent were $60,000. At the time the patent had been in existence for 5 years. Determine the amount to be amortized for (answer in whole dollars, no currency symbol, no decimals) :

Year 1:

Year 6:

Answer 1

Year 1	Patent amortization Cost/No. of years
	250000/10	25000	amount amortized
Year 6	$60000 spent as legal cost to defend the patent
	Assuming the defence was succesfull the amortization is
	Carrying value of patent 250000-(25000*5)	125000
	Legal cost				60000
	Total cost to be amortzed in 5 years	185000
	Amout amortized 185000/5	37000
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