Practice prompt · Q:intangibles-research-software-and-goodwill/amortization-computation-001

Compute amortization when the economic life is shorter

Tests whether the learner amortizes over the shorter of legal and expected benefit period.

Updated Sep 11, 2026 Review due Nov 18, 2026

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A company buys a patent for 720,000 with 12 years of legal life remaining. It expects the underlying product to be displaced by a competing technology in 8 years, after which the patent will be worth nothing.

The useful life cannot extend beyond the enforceable legal term unless renewal evidence supports a longer period. Here the supported eight-year benefit period is shorter than the remaining legal term. See ASC 350-30-35-2 and 350-30-35-6.

Choose the best answer. a 90,000 a year. b 60,000 a year. c Nothing, because the patent is tested for impairment instead. d 144,000 a year, over the 5 years until the competing technology is announced.

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Answer: a

Choice a. 720,000 over the shorter 8-year expected benefit period is 90,000 a year.