A Patent Was Purchased for $585,000 with a Legal Life

question 73

Multiple Choice

A patent was purchased for $585,000 with a legal life of 20 years.Management estimates that the patent has an 12- year economic life.The entry to record amortization would include:

• A)an increase in amortization expense for $29,250.
• B)an increase in research and development expense for $585,000.
• C)a decrease in patent for $48,750.
• D)an increase in accumulated amortization for $585,000.

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Definitions:

Negotiated Increases

Adjustments to wages, prices, or other financial terms that are determined through the process of negotiation rather than being set by market forces or regulatory decree.

Pension Plan

An employment-based savings program where an employer must deposit funds into a designated account intended for an employee's retirement benefits.

Profit Sharing

A compensation strategy where employees receive additional payments based on the company's profitability, beyond their standard salaries or wages.

Social Responsibility

The idea that businesses should balance profit-making activities with activities that benefit society; encompasses everything from charity work to reducing carbon footprints.