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3 June, 16:13

Alta Co. spent $400,000 during the current year developing a new idea for a product that was patented during the year. The legal cost of applying for a patent license was $40,000. Also, $50,000 was spent to successfully defend the rights of the patent against a competitor. The patent has a life of 20 years. What amount should Alta capitalize related to the patent?

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  1. 3 June, 18:22
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    amount of capitalize related to the patent is $90000

    Explanation:

    given data

    spent = $400,000

    patent license = $40,000

    defend rights of the patent = $50,000

    patent life = 20 years

    solution

    as we know that development cost of new product idea is an direct expense

    so here Legal fee will be incurred for apply patent and successfully defend the patent right is the capitalized asset

    so capitalize related to the patent is = $50,000 + $40,000

    amount of capitalize related to the patent is $90000
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