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Accounting_patent amortization expense

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You are examining the financial statements of a company. You observe patent amortization expense of $1.5 million and a loss on impairment of goodwill for $25 million.

(a) Describe how the accountants arrived at these amounts.
(b) Interpret any information provided by these disclosures.

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Solution Summary

Your tutorial is 179 words plus two references and gives you the general idea behind both of these amounts in the financial statements, what they mean, how they were determined, and what you can know when you see them in a financial report.

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Patent amortization:

(a) This is arrived at by taking the cost of the patent and spreading it over the expected useful life (or the life of the patent, whichever is shorter). The amount is done using straight-line method (same amount each year).
(b) When you see this amount, you know they have ...

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