Blue Co Has a Patent on a Communication Process

question 94

Multiple Choice

Blue Co. has a patent on a communication process. The company has amortized the patent on a straight-line basis since 2009, when it was acquired at a cost of $36 million at the beginning of that year. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life being used to amortize its cost. The decision was made at the end of 2013 (before adjusting and closing entries) . What is the appropriate patent amortization expense in 2013?

• A)$4 million.
• B)$5 million.
• C)$10 million.
• D)$20 million.

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