A Patent That Has A Legal Life Of 20 Years And A Useful Life Of Less Than 20 Years Should:
The correct option of this multiple choice question is D, as Useful Life of patent can be shorter than legal life and over that period, the patent will provide economic benefits to the business by increasing its sales. Actually, the amortization on Patent is charged to expense over its useful life or legal life whichever is less. For example, if the legal life is 20 years but the useful life is 18 years, then it should be amortized over its useful life of 18 year during which it is valuable for the business and generate revenues for it. If the legal life is less than useful life, then it means that invention period is expired due to non-payment of periodic maintenance fees, which is paid for maintaining legal life of patent. In this case, amortized on patent is charged upto the legal life. The option A is not correct choice here as patent can’t be amortized exceeding the legal life. It is amortized over its useful or legal life whichever is less. The option B is also wrong choic...