Question

Sheridan Company incurred research and development costs of $93000 and legal fees of $33000 to develop a patent. The patent has a legal life of 20 years and a useful life of 10 years. What amount should Sheridan record as Patent Amortization Expense in the first year

Answer 1

Answer:

$3,300

Explanation:

Patent Amortization expense in first Year = Amount of legal fees / Useful life

= $33,000 / 10 years

= $3,300

Note: The amount of patent amortized is equal to the amount of Legal fees over the useful life of years.  i.e $33,000 should be considered as amortization of patent expense and it is amortized over the useful life of the asset.