During 2015, Traco Machine Company spent $176,000 on R&D costs for an invention. This invention was patented on January 2, 2016, at a nominal cost that was expensed in 2016. The patent had a legal life of 20 years and an estimated useful life of 8 years. In January 2020, Traco paid $16,000 for legal fees in a successful defense of the patent. Amortization for 2020 should be:
Compute the amortization expenses of Company T for the year 2020.
Amortization: Amortization is a process in which the cost of intangible assets is spread equally over the limited or definite useful life of asset.
Compute the amortization expenses of Company T for the year 2020 as follows:
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