Jason Purchases a Patent at a Cost of $24,000

question 80

Multiple Choice

Jason purchases a patent at a cost of $24,000. The patent has 8 years of legal life remaining from the date of purchase.
I.If the patent is the only asset Jason purchased, he must amortize the patent over 15 years.
II.If the patent was part of the purchase of all the assets of a business, he must amortize the patent over 15 years.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Proprietor's Income

Income earned by the owners of unincorporated businesses, reflecting their compensation for services provided.

Sole Proprietorship

A business owned and operated by a single individual, with no legal distinction between the owner and the business.

Corporation

A legal entity distinct from its owners that can own assets, incur liabilities, and sell stocks to raise capital.

Partnership

A legal form of business operation between two or more individuals who share management and profits.