At the End of 2013, Clock Products, Inc

question 93

Multiple Choice

At the end of 2013, Clock Products, Inc.determined that one of its patents was worthless.The patent had a cost of $300,000.The patent had been amortized for 5 years of its estimated 15-year legal life.Which of the following statements is correct?

• A)Clock Products must continue to amortize the patent over its remaining 10 years of life.
• B)The patent must be reduced to 5/15, or 33.3% of its original cost and amortized over the remaining 10 years.
• C)The remaining unamortized cost must be removed from the accounting records and treated as a loss on the income statement.
• D)Clock Products must correct its financial statements for the past five years, so that the entire cost is allocated to that five-year period.

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Definitions:

Inflation Rate

The percentage increase in the general level of prices for goods and services in an economy over a period of time, typically measured annually.

Average Level

A mean or typical value obtained by dividing the total of all observed values of a variable by the number of observations.

Discouraged Workers

Individuals who are not actively seeking employment due to believing that no jobs are available for them or there are no jobs for which they would qualify.

Frictional Unemployment

Unemployment that occurs when people are between jobs or are entering the workforce for the first time.