On January 1 of the Current Year,Dentux Corp

question 74

Multiple Choice

On January 1 of the current year,Dentux Corp.purchases a patent from another corporation for $600,000.The patent has a remaining life of 10 years.The patent is the only asset purchased from that corporation.Also on January 1,Dentux purchases all of the assets of Fenton Corp.Included in the Fenton assets acquired is a patent worth $300,000 that has a 10-year remaining life.What is the allowable amortization deduction on the two patents?

• A)$60,000
• B)$90,000
• C)$80,000
• D)$160,000

---

Definitions:

Risk-free Rate

The theoretical rate of return on an investment with zero risk, typically represented by U.S. Treasury securities.

Modified Duration

A measure of a bond's price sensitivity to changes in interest rates, taking into account the bond's yield, coupon, and time to maturity.

Hedge Ratio

A ratio used to measure the amount of exposure reduced by hedging, typically in the context of derivatives and risk management.

T-bond Futures

Futures contracts that are agreements to buy or sell U.S. Treasury bonds at a predetermined price on a specified date in the future.