Amortization expense smith & sons obtained a patent for a new optical scanning device. the fees incurred to file for the patent and to defend the patent in court against several companies which challenged the patent amounted to $45,000. smith & sons concluded that the expected economic life of the patent was 12 years. calculate the amortization expense that should be recorded by smith & sons in the second year. $answer

The amortization expense that Smith & Sons should record in the second year is $3,750.

Data and Calculations:

Cost of patent = $45,000

Expected economic life = 12 years

Amortization expense each year = $3,750 ($45,000/12)

Thus, the amortization expense for each of the economic life of the patent should be $3,750, using the straight-line method.

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The amortization expense that should be recorded by Smith & Sons in the second year is $3,750

Explanation:

The computation of the amortization expense in the second year is shown  below:

= (Cost of patent) ÷  (expected economic life of the patent)

= ($45,000) ÷ (12 years)

= $3,750

The amortization expense should be the same for the expected life i.e 12 years

For more understanding, we pass the journal entry which is shown below:

Amortization expenses A/c Dr $3,750

       To Patent A/c                           $3,750

(Being amortization expense recorded)

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