In January, 2015, Tillicum Corp

question 78

Multiple Choice

In January, 2015, Tillicum Corp. purchased a patent for a new consumer product for $ 900,000. At the time of purchase, the patent was valid for 15 years. Due to the competitive nature of the product, however, the patent was estimated to have a useful life of only ten years. During 2020, the product was permanently removed from the market because of a potential health hazard. What amount should Tillicum recognize as an impairment loss for calendar 2020, assuming amortization has been recorded annually using the straight-line method with no residual value?

• A) $ 600,000
• B) $ 450,000
• C) $ 90,000
• D) $ 60,000

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Definitions:

Android

An operating system developed by Google for mobile devices, characterized by its open-source accessibility and widespread use in smartphones and tablets.

Cost Leadership

A business strategy aimed at becoming the lowest-cost producer in an industry, enabling it to offer products or services at a lower price than competitors.

Porter's Model

A strategic tool developed by Michael E. Porter used to analyze the competitive environment of an industry, including five forces: the threat of new entrants, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and competitive rivalry.

Generic Competitive Strategies

Generic Competitive Strategies are basic approaches developed by Michael Porter for businesses to gain competitive advantage, including cost leadership, differentiation, and focus strategies.