Question

Jorge purchased a patent for use in his business in the current year. The purchase occurred on July 15th and the purchase price was $75,000. If the patent has a remaining life of 75 months, what is the total amortization expense Jorge may deduct during the current year?

Answer 1

Answer:

The patent amortization expense that Jorge may deduct in the current year is $6000

Explanation:

Jorge purchased the patent in the 7th month of the year,from 7th till the end of year gives a total of 6 months, in other words, Jorge is able to amortize 6 months of patent in the year of purchase.

Patent amortization expense=patent value*applicable months in the year/useful life of the patent

patent value is $75000

applicable months in the year is 6

useful life is 75 months

Patent amortization expense=$75000*6/75

Patent amortization expense=$6000