By Admin on Feb 18, 2010 in Other - Business & Finance
goodfella_4 asked:
On January 1, 2003, Staton Company paid $160,000 to obtain a patent. Staton expected to use the patent for 5 years before it became technologically obsolete. Based on this information, the amount of amortization expense on the December 31, 2005 income statement and the book value of the patent on the December 31, 2005 balance sheet would be:
On January 1, 2003, Staton Company paid $160,000 to obtain a patent. Staton expected to use the patent for 5 years before it became technologically obsolete. Based on this information, the amount of amortization expense on the December 31, 2005 income statement and the book value of the patent on the December 31, 2005 balance sheet would be:
a. $32,000 / $96,000.
b. $32,000 / $54,000.
c. $54,000 / $96,000.
Each year, the amortization expense on the year end income statement is going to be
$160,000 / 5 = $32,000
———————————–
After 3 years (on December 31, 2005),
3 * $32,000 = $96,000 will have been amortized, and the
book value, as I figure it, would be $160,000 – $96,000
= $64,000.
(Maybe you made a typo when you posted the question?)
capwest5a | Feb 19, 2010 | Reply