Hello,

This is a practice exam solution from a previous year that my professor has given me to study with. I have a question about this patent question. I understand how the patent was amortized down to its book value of 53,375 on 4/1/17. I don't understand where the 42825 number came from that was added to the book value to get a new book value. It seems like it should be 42,700, because those were the legal fees paid on 4/1/17. I'm not sure why the number is 42,825 and not 42,700 . Could you please help me with this? Thank you! - Lauren

Part VI. (6 points) Sun Devil Laboratories holds a valuable patent (No. XJ201) on a precipitator that prevents certain types of air pollution. The history of Sun Devil's Patent XJ201 is as follows: Date Activity Cost 2012 - 2014 Research conducted to develop precipitator $384,000 RED Jan 2015 Design and construction of a prototype 87,600 RED March 2015 Testing of models 42,000 RED Jun 30, 2015 Fees paid to lawyers & federal government for patent application. Patent granted June 30, 2014 20 15 59,500 Nov 2016 Research aimed at modifying the design of the patented precipitator 81,500 RED April 1, 2017 Legal fees paid to successfully defend precipitator patent 42,700 Jul 2018 Sun Devil revised its useful life of Patent XJ201 downward to 5 years remaining years. Sun Devil estimated a useful life of 17 years when it received the initial patent for XJ201. Amortization is computed to the nearest whole month using the straight-line method, no salvage. a. Determine the original cost of Patent XJ201: $ 59, 500 b. Determine Amortization Expense for the period ended December 31, 2017: . [ 875 + 9019] $ 9864 2 Patent c. Determine the book value as of December 31, 2018: $_ 73,051 2 59, 506 3560a. Determine the original cost of Patent XJ201: b. Determine Amortization Expense for the ($75+ 90192] period ended December 31, 2017: S 9864 2 Patent c. Determine the book value as of December 31, 2018: 73,051 2 Jull 59, 500 $15 59, 500 1750 15 ( Gmos ) 5- L 17 : 3560 3500 '16 875 17 ( 3500 x 3 /12 mos ) BV@ 53, 375 New +42, 805. 5- L= 96 200 8 you remain 12025 New BV 96, 200. 9019 1 120251,* 9/12 mos ) 17 12131 /17 87, 1.81 4013 ( 12,025 x 6 / 2 ) S-L = 8halle8 7/1 . 81, 168 5 = 14, 234 X 12= 8,117 8:117 6 73 051