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Patent Amortization & Net Value

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On January 1, 2008, Rans Co. purchased a patent for $595,000. The patent is being amortized over its remaining legal life of 15 years expiring on January 1, 2023. During 2011, Rans determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2011? (provide computation)

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Solution Summary

The solution computes net patent value after amortization for a given balance sheet date.

Solution Preview

Original Amortization = 595,000/15 = $39,666.67

Total Accumulated Amortization = 39,666.67*3 = $119,000

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