Broadway Corporation was granted a patent on a product on January 1, 2004. To pr

Question

Broadway Corporation was granted a patent on a product on January 1, 2004. To protect its patent, the corporation purchased on January 1, 2015 a patent on a competing product which was originally issued on January 10, 2011. Because of its unique plant, Broadway Corporation does not feel the competing patent can be used in producing cost of the competing patent should be amortized over a maximum period of 20 years amortized over a maximum period of 16 years amortized over a maximum period of 9 years expensed in 2015.

Explanation / Answer

The original patent acquired on Jan 1, 2004 was to be amortised over 20 years. It had been amortised over 11 years till 31st decemcber 2014. The new patent was acquired to protect the original patent. The remaining life of amortisation for the original patent is 9 years. Thus, the original patent alongwith the new patent should be amortised over the remaining life of 9 years.

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