On January 3, 2018, Tracer Incorporated purchased a patent for $550,000 to manufacture a new type...

Transcribed Image Text:

On January 3, 2018, Tracer Incorporated purchased a patent for $550,000 to manufacture a new type of chair. The patent has a remaining legal life of 12 years. Tracer plans to manufacture the chair for ten years and the residual value of the patent is estimated to be $50,000. The company amortizes intangible assets using the straight-line method. On January 3st, 2021, Tracer decides to sell the patent for $355,000. Assuming the company has a December 31 year end, what is the gain or loss recorded on the sale of the patent? Please indicate in your answer whether it is a gain or loss. For example, $10,000 gain or $50,000 loss. On January 3, 2018, Tracer Incorporated purchased a patent for $550,000 to manufacture a new type of chair. The patent has a remaining legal life of 12 years. Tracer plans to manufacture the chair for ten years and the residual value of the patent is estimated to be $50,000. The company amortizes intangible assets using the straight-line method. On January 3st, 2021, Tracer decides to sell the patent for $355,000. Assuming the company has a December 31 year end, what is the gain or loss recorded on the sale of the patent? Please indicate in your answer whether it is a gain or loss. For example, $10,000 gain or $50,000 loss.

Answer rating: 100% (QA)

Cost of patent 550000 Useful life 10 years Residual value 50000 Annual amortization expense Cost o... View the full answer