On January 2, 2019, Adelphi Company purchased a patent for $235,000 plus

$10,000 in legal fees. On that date, the patent had a remaining legal life of 13 years.

Adelphi Company expects to use the patent for 7 years after which time it will be

worthless. How much is the annual amortization expense for 2019? Round to

nearest whole dollar.

The annual amortization expense for 2019 will be $35000.

Explanation:

The amortization expense for the patent calculated based on the useful life of patent. The purchase of value of $235000 plus $10000 gives the total value of $245000 while use the patent of 7 years.

The formula for amortization expense = (Cost of patent - Residual value) / Useful life of patent)

amortization expense = ($245000-0) / 7 = $35000

The legal life would not count due patent in business use for limited life compare to legal life of patent.