How much would Lexicon record as amortization expense for this patent for the year ending December 31 , 2005?
Not what you're looking for?
Please help with the given problem:
Lexicon Inc. bought a patent for $600,000 on January 2, 2001, at which time the patent had an estimated useful life of ten years. On February 2, 2004, it was determined that the patent's useful life would expire at the end of 2007. How much would Lexicon record as amortization expense for this patent for the year ending December 31 , 2005?
Purchase this Solution
Solution Summary
This solution provides an explanation of how to complete the given business finance question. The solution is provided based on Canadian accounting standards.
Solution Preview
It is a case of the revision of amortization rates. The amortization amount is determined on the basis of an estimate of the useful life of an asset. Amortization is only an estimate, however it may be necessary to revise the calculations during the life of the asset. The cost of patent is amortized over its legal life or useful life whichever is shorter.
In the above posted problem amortization was estimated on the basis of patent's useful life of ten years but after 3 years ...
Purchase this Solution
Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce