On December 31, year 0, your company bought a patent for $800. The remaining life on the
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Question:
On December 31, year 0, your company bought a patent for $800. The remaining life on the patent is 10 years, after which the patent will have no value. Your company uses straight-line amortization. On January 1, year 3, a competitor announces a competing product, which causes you to revise the patent value down to $52.61.
What was the effect of revision of the patent value on pre-tax income?
- Assume that the net book value on December 31, year 2 is the same as the net book value on January 1, year 3.
- Use positive numbers for increases in pre-tax income, and negative numbers for decreases. Round your answer to the nearest cent.
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell
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