In January 2016,Vega Corporation Purchased a Patent at a Cost

question 113

Multiple Choice

In January 2016,Vega Corporation purchased a patent at a cost of $200,000.Legal and filing fees of $50,000 were paid to acquire the patent.The company estimated a 10-year useful life for the patent and uses the straight-line amortization method for all intangible assets.In January,2019,Vega spent $40,000 in legal fees for an unsuccessful defense of the patent and the patent is no longer usable.The amount charged to income (expense and loss) in 2019 related to the patent should be:

• A)$ 40,000.
• B)$ 65,000.
• C)$215,000.
• D)$ 25,000.

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Definitions:

Earnings Per Share

A financial metric that measures the portion of a company's profit allocated to each outstanding share of common stock, presenting a company's profitability.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership value in the company.

Sales Revenue

The total income received by a company from its sales of goods or services before any expenses are subtracted.

Return on Equity

A financial ratio indicating the relative profitability of a company, calculated by dividing net income by shareholder equity.