The Cost of a Patent Should Be Amortized

question 42

Multiple Choice

The cost of a patent should be amortized :

• A) over 10 years.
• B) over its economic life.
• C) over 20 years or its economic life, whichever is shorter.
• D) only if an impairment occurs.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity and operational efficiency of the business.

Loan Defaults

Occurs when a borrower fails to meet the legal obligations or conditions of a loan agreement.

Realization

The process of converting non-cash assets into cash, often recognized in accounting when revenue is earned and not necessarily when cash is received.