Estimate that the remaining life of the patent purchased

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Reference no: EM132318914

Exercise

Sandhill Company has provided information on intangible assets as follows. A patent was purchased from Ford Company for $2,716,000 on January 1, 2016. Sandhill estimated the remaining useful life of the patent to be 10 years. The patent was carried in Ford s accounting records at a net book value of $2,084,000 when Ford sold it to Sandhill.

During 2017, a franchise was purchased from Polo Company for $552,000. and takes a full year's amortization in the year of purchase. Sandhill incurred research and development costs in 2017 as follows.

Materials and equipment

$143,400

Personnel

191,000

Indirect costs

102,900

 

$437,300

Sandhill estimates that these costs will be recouped by December 31, 2020. The materials and equipment purchased have no alternative uses.

On January 1, 2017, because of recent events in the field, Sandhil Estimates that the remaining life of the patent purchased on January 1, 2016, is only 5 years from January 1, 2017.

Reference no: EM132318914

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