the Dwyer corporation incurred costs of 114000 in purchasing a process which it eventually had patented. The patent was issued on July 20x1. To secure the patent, an additional 6000 had been spent on legal fees. On June 30 20x3, a patent infringement suit was successfully defended at a cost of 10000. The legal cost of 10000 is amortized over the remaining life of the patent (which for this case is 17 years). What would the amortization expense applicable to the patent for 20x2 be. a) 7058.82 b) 6705.88 c)3529.41 d)352.94
I think it is a) just want confirmation.
To calculate the amortization expense applicable to the patent for 20x2, we need to determine the remaining cost to be amortized and then divide it by the remaining life of the patent.
First, let's calculate the total cost incurred to secure the patent:
Cost of purchasing the process = $114,000
Legal fees = $6,000
Total cost = $114,000 + $6,000 = $120,000
Next, we need to subtract the already defended legal cost of $10,000 from the total cost to get the remaining cost to be amortized:
Remaining cost = Total cost - Legal cost = $120,000 - $10,000 = $110,000
Now, let's calculate the amortization expense applicable to the patent for one year:
Amortization expense per year = Remaining cost / Remaining life of the patent
Amortization expense per year = $110,000 / 17 years ≈ $6,470.59
Since we need to find the amortization expense for 20x2, we can simply use the same value calculated above.
Therefore, the amortization expense applicable to the patent for 20x2 is approximately $6,470.59.
The closest option provided is b) $6,705.88.