Paulman Incurred $68,000 of Research and Experimental Expenses and Began

question 122

Essay

Paulman incurred $68,000 of research and experimental expenses and began amortizing them over 60 months during June of Year 1. During May of Year 3, Paulman received a patent based upon the research being amortized. $49,000 of legal expenses for the patent were incurred. The patent is expected to have a remaining useful life of 17 years.
1) What is the basis of the patent? (Round amortization for each year to the nearest whole number.)
2) What is the amortization deduction with respect to the patent during the year it was issued? (Round final answer to the nearest whole number.)

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Definitions:

Investing Activities

Transactions and events that involve the acquisition or disposal of long-term assets and investments by a company.

Financing Activities

Transactions that result in changes in the size and composition of the equity and borrowings of a company.

Direct Method

A cash flow statement preparation approach that lists major classes of gross cash receipts and payments.

Investing Activities

A section of the cash flow statement of a company which documents the buying and selling of long-term assets, including property, plant, and equipment.