A purchased patent has a legal life of 20 years It should be

A purchased patent has a legal life of 20 years. It should be expensed in the year of acquisition. amortized over 20 years regardless of its useful life. amortized over its useful life if less than 20 years. not amortized.

Solution

Option C (amortized over its useful life if less than 20 years)

If the useful life of patent is less than its legal life, it should be amortized over its useful life. Here, the patent should be amortized over its useful life if less than 20 years.