Question

Paulman incurred $70,000 of research and experimental expenses and began amortizing them over 60 months during June of Year 1. During May of Year 3, Paulman received a patent based upon the research being amortized. $51,000 of legal expenses for the patent were incurred. The patent is expected to have a remaining useful life of 17 years.

1) What is the basis of the patent? (Round amortization for each year to the nearest whole number.)

2) What is the amortization deduction with respect to the patent during the year it was issued? (Round final answer to the nearest whole number.)

Answer 1

1
The basis of patent would include legal expenses and unamortized value of research
Amount of research	$70,000
Uaeful life	60	months
Amortization per month	$1,166.67
No of months amortized	24	June, year 1 to May, year 3
Total research amortized	$28,000	1166.667*24
Unamortized research	$42,000	(70,000-28,000)
Legal expenses	$51,000
Patent basis	$93,000	(42,000+51,000)
2.
Remaining amortized period	204
Patent basis	$93,000
Amortization per month	$456
Total patent amortized	$3,191	456*7