Question

Kleen Company acquired patent rights on January 10 of Year 1 for $2,800,000. The patent has...

Kleen Company acquired patent rights on January 10 of Year 1 for $2,800,000. The patent has a useful life equal to its legal life of eight years. On January 7 of Year 4, Kleen successfully defended the patent in a lawsuit at a cost of $38,000.

Required:
a. Determine the patent amortization expense for Year 4 ended December 31.
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Answer #1
Answer:
Patent amortization expense for Year 4 ended December 31
                 = Patents Costs / Legal Life
                 = [ $ 2,800,000 / 8 Years ] + [ $ 38,000 / ( 8 (-)3 Year )
                 =   $ 350,000 + $ 7,600		 $ 357,600
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