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Granite Enterprises acquired a patent from Southern Research Corporation on January 1, 2018, for $4.8 million....

Granite Enterprises acquired a patent from Southern Research Corporation on January 1, 2018, for $4.8 million. The patent will be used for 5 years, even though its legal life is 20 years. Rocky Corporation has made a commitment to purchase the patent from Granite for $280,000 at the end of five years. Compute Granite's patent amortization for 2018, assuming the straight-line method is used.

Multiple Choice

  • $904,000.

  • $480,000.

  • $452,000.

  • $960,000.

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Answer #1

Patent amortization for 2018 = Cost of patent/Useful life

= 4800000/5

Patent amortization for 2018 = 960000

So answer is d) $960000

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