A Purchased Patent Has a Remaining Life of 15 Years

question 8

Multiple Choice

A purchased patent has a remaining life of 15 years. It should be

• A) Expensed in the year of acquisition
• B) Amortized over 15 years regardless of its useful life
• C) Amortized over its useful life if less than 15 years
• D) Amortized over 40 years

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Definitions:

Plantwide Overhead Rate

A single overhead absorption rate used throughout an entire factory or plant to allocate overhead costs to production activities.

Machine Hours

A measure of production time, calculated as the total number of hours machines are operated in the production process.

Overhead Assigned

The process of allocating indirect costs, such as utilities or rent, to specific products or departments within a company.

Allocation Base

a criterion or measure used for distributing costs evenly across various departments or products.