9. On July 1, 2022 Trump Co. purchased a patent for a pump that details a novel system to drain swamp land. The purchase price of the patent was $40,000, and at the time of the purchase there were 10 years left before the patent's expiration. What is the amount of Amortization Expense that Trump Co. should record with respect to this patent in 2022?
9. On July 1, 2022 Trump Co. purchased a patent for a pump that details a novel system to drain swamp land. The purchase price of the patent was $40,000, and at the time of the purchase there were 10 years left before the patent's expiration. What is the amount of Amortization Expense that Trump Co. should record with respect to this patent in 2022?
Chapter1: Financial Statements And Business Decisions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:9. On July 1, 2022 Trump Co. purchased a patent for a pump that details a novel system to drain swamp
land. The purchase price of the patent was $40,000, and at the time of the purchase there were 10 years
left before the patent's expiration.
What is the amount of Amortization Expense that Trump Co. should record with respect to this patent in
2022?
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