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Thompson Company incurred research and development costs of $100,000 and legal fees of $40,000 to acquire a patent. The patent has a legal life of 20 years and a useful life of 10 years. What amount should Thompson record as Patent Amortization Expense in the first year?

Respuesta :

Answer:

$4,000

Explanation:

given,

Thompson company incurred research and development cost =  $100,000

Thompson company legal fees =  $40,000

patent legal life = 20 years

useful life  = 10 years.

the amount of patent to amortize in the first year is the legal fee.

hence, the amortize fee will be $40,000

For first  year Patent amortized Expense will be equal to the $40,000 / 10 years.

hence, the first year amortization expense will be equal to $4,000

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