At the end of 2016, Clock Products, Inc determined that one of its patents was worthless. The patent had a cost of $300,000 . The patent had been amortized for 5 years of its estimated 15-year legal life. Which of the following statements is correct?
a. Clock Products must continue to amortize the patent over its remaining 10 years of life.
b. The patent must be reduced to 5/15, or 33.3% of its original cost and amortized over the remaining 10 years.
c. The remaining unamortized cost must be removed from the accounting records and treated as a loss on the income statement.
d. Clock Products must correct its financial statements for the past five years, so that the entire cost is allocated to that five-year period.
c
You might also like to view...
When reconciling a bank account, the company must prepare an adjusting entry for deposits in transit
a. True b. False Indicate whether the statement is true or false
The adjusting entry required for bonds issued at a discount would require d. a debit to Bond Interest Expense, a debit to Discount on Bonds Payable, and a credit to Cash; b. a debit to Bond Interest Expense, a debit to Discount on Bonds Payable, and a
credit to Bond Interest Payable; c. a debit to Bond Interest Expense, a credit to Discount on Bonds Payable, and a credit to Bond Interest Payable; d. a debit to Bond Interest Expense and a credit to Cash; e. a debit to Cash and a credit to Bonds Payable
Explain how risk analysis is used to estimate profits
What will be an ideal response?
The normal order followed by the FASB in publishing its standards is
a. statement, discussion memorandum, opinion. b. discussion memorandum, interpretation, exposure draft, statement. c. exposure draft, discussion memorandum, statement. d. discussion memorandum, exposure draft, statement.