On January 1 of the current year, Dentux Corp. purchases a patent from another corporation for $600,000. The patent has a remaining life of 10 years. The patent is the only asset purchased from that corporation. Also on January 1, Dentux purchases all of the assets of Fenton Corp. Included in the Fenton assets acquired is a patent worth $300,000 that has a 10-year remaining life. What is the
allowable amortization deduction on the two patents?
A) $60,000
B) $90,000
C) $80,000
D) $160,000
C) $80,000
The $600,000 patent purchased as a single asset is amortized over its remaining 10-year life. The $300,000 patent is an acquisition-related intangible (Sec. 197) and must be amortized over 15 years. ($600,000/10 + $300,000/15)
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