Ely CoBought a Patent from Baden Corp

question 29

Multiple Choice

Ely Co.bought a patent from Baden Corp.on January 1, 2011, for $300,000.An independent consultant retained by Ely estimated that the remaining useful life at January 1, 2011 is 15 years.Its unamortized cost on Baden's accounting records was $150,000; the patent had been amortized for 5 years by Baden.How much should be amortized for the year ended December 31, 2011 by Ely Co.?

• A)$0.
• B)$15,000.
• C)$20,000.
• D)$30,000.

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Definitions:

90-Day Note

A short-term debt security that matures in 90 days, typically used in the financing of inventory, accounts receivable, or other short-term needs.

Note Receivable

Note Receivable is a financial asset representing a written promise to receive a specific amount of money from another party on a determined future date or dates.

Credit Sales

Sales transactions where the payment is delayed as per agreed terms between the seller and the buyer.

Retail Store Credit Card

A credit card issued by a retail store allowing customers to purchase goods on credit from that specific retailer.