Question

Required information The following information applies to the questions displayed below in research and experimental costs for developing a specialized product during July of year 1 Bethany incurred $29,750 Bethany went thro 3. Bethany expects the patent to have a remaining useful life of 10 years. your final answers to nearest whole doller amount.) ugh a lot of trouble and spent $26,750 in legal fees to receive a patent for the product in August of year (Do not round intermediate calculations. Round patent amortization expense would Bethany deduct in year 3, assuming she elected to amortize the research and experimental costs over 60 months?

Answer 1

Ans- Amortization expense for year 1,2 and 3 for amortization of expenses over 60 months:-

Description	Amount	Explanation
Research and experimental expenses	$29,750
Recovery period in months	60
Monthly straight line amortization	$495.83	$29,750/ 60
B's business months during year 1	6	July through December
Year 1- Straight line amortization	$2,975	$495.83*6
B's business months during year 2	12	January through December
Year-2 Straight line depreciation	$5,950	$495.83*12
B's business months during year 3 (Before patent is issued in August)	7	January through July
Year 3-Straight line amortization on research and experimental costs	$3,470.83	$495.83*7
Accumulated amortization through July of Year 3	$12,395.83	$2,975+$5,950+ $3,470.83
Unamortized research and experimental expenditures as of August,year 3	$17,354	$29,750-$12,395.83

Calculate patent amortization expense in year 3 assuming to amortize research and experimental expense:-

Description	Amount	Explanation
Unamortized research and experimental expenses	$17,354
Legal expenses related to patent	$26,750
Amortizable expenses for patent	$44,104	$17,354+$26,750
Recovery period in months	120	10 years
Monthly straight line amortization	$367.53	$44,104/ 120
Bethany's business months from August through December	5
Year 3- Straight line amortization for patent	$1,837.67	$367.53 *5