Question

Gessner LLC patented a process it developed in the current year. The patent is expected to create benefits for Gessner over a 10-year period. The patent was issued on April 15 th and the legal costs associated with the patent were $43,000. In addition, Gessner had unamortized research expenditures of $15,000 related to the process.

What is the total amortization expense Gessner may deduct during the current year?

Answer 1

Answer:

$4,350

Explanation:

The computation of the total amortization expense is shown below:

= Legal costs associated with the patent + unamortized research expenditures ÷ time period × number of months

= $43,000 + $15,000 ÷ 120 months × 9 months

= $58,000 ÷ 120 months × 9 months

= $4,350

The amortization period would be lesser of patent life i.e 20 years or useful life i.e 10 years and 10 years is converted into months i.e 120 months

And, the 9 months is calculated from April 15 to December 31

As we assume that the books are closed on December 31