On January 1, 2007, Taft Co. purchased a patent for 714,000. The patent is being amortized over its remaining legal life of fifteen years expiring on January 1, 2022. During 2010, Taft determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2010? a.428,400 b.489,600 c.504,000 d.523,600
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.
On January 1, 2007, Taft Co. purchased a patent for 714,000. The patent is being amortized over its remaining legal life of fifteen
years expiring on January 1, 2022. During 2010, Taft determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported in the
a.428,400
b.489,600
c.504,000
d.523,600
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