Granite Enterprises Acquired a Patent from Southern Research Corporation on January

question 3

Multiple Choice

Granite Enterprises acquired a patent from Southern Research Corporation on January 1, 2013, for $4 million. The patent will be used for 5 years, even though its legal life is 20 years. Rocky Corporation has made a commitment to purchase the patent from Granite for $200,000 at the end of five years. Compute Granite's patent amortization for 2013, assuming the straight-line method is used.

• A)$380,000.
• B)$400,000.
• C)$760,000.
• D)$800,000.