At the End of 2017,Clock Products,Inc

question 196

Multiple Choice

At the end of 2017,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 five 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 ten years of life.
• B)The patent must be reduced to 5/15,or 33.3% of its original cost and amortized over the remaining ten 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:

Reaction

A process in which substances interact to form one or more new substances with different chemical and physical properties.

Organic Product

A compound containing carbon atoms that is typically derived from living organisms or their by-products.

Reaction

A process in which one or more substances (the reactants) undergo chemical change to form new substances (the products) with different physical and chemical properties.

Platinum Catalyst

A catalyst containing platinum, utilized in various chemical reactions, including hydrogenation and oxidation, due to its excellent ability to facilitate bond formation and breakage.