On October 1, 2017, Nurix, Inc. purchased a patent for $200,000 cash. Although the patent gives...
On October 1, 2017, Nurix, Inc. purchased a patent for $200,000 cash. Although the patent gives legal protection for 20 years, the patent is expected to be used for only 10 years. What will be the balance in the patent account on September 30, 2018?
|
a |
$190,000 |
|
b |
$180,000 |
|
c |
$100,000 |
|
d |
$200,000 |
Homework Answers
As per IAS38 Intangible assets
A patent asset should not be amortized for longer than the lifespan of the protection afforded by the patent. If the expected useful life of the patent is even shorter, use the useful life for amortization purposes. Thus, the shorter of a patent's useful life and its legal life should be used for the amortization period.
Hence the amortisation for the the year (september-october,2018) shall be $200000/10years= $20,000.
The balance as on September 30,2018 shall be $1,80,000.(i.e.,$ 2,00,000-20,000)
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