Question

Berry Co. purchases a patent on January 1, 2021, for $44,000 and the patent has an expected useful life of five years with no residual value. Assuming Berry Co. uses the straight-line method, what is the amortization expense for the year ended December 31, 2022?

Answer 1

Answer:

$17,600

Explanation:

Data provided in the question:

Cost of the patent purchased = $44,000

Useful life = 5 years

Residual value = 0

Now,

using the straight-line method,

we have

Annual amortization expense = [ cost - Residual value ] ÷ (Useful life)

= [ $44,000 - 0 ] ÷ 5

= $8,800 per year

Therefore,

The accumulated amortization expense from January 1, 2021 to December 31, 2022

= Annual amortization expense × 2 years

= $8,800 × 2

= $17,600

Hence,

the amortization expense for the year ended December 31, 2022 = $17,600