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:

Statute Of Frauds

A legal requirement that certain contracts must be in writing to be enforceable.

Enforceable

Capable of being imposed or executed under law or legal authority.

In Writing

A contractual or legal requirement that stipulates information, agreements, or official statements must be documented in physical or electronic text form.

Limited Liability Partnership

A partnership where some or all partners have limited liabilities, protecting them from the debts of the partnership beyond their investment.