SOLUTION: Hello, my problem is: Suppose you are the accountant for a certain pharmaceutical company. In January 2000, the company purchased the patent rights for a new medication from Novae,

Question 1197800: Hello, my problem is: Suppose you are the accountant for a certain pharmaceutical company. In January 2000, the company purchased the patent rights for a new medication from Novae, Inc., for $12,000,000. The patent had 15 years remaining as its useful life. In January 2005, your pharmaceutical company successfully defended its right to the patent in a lawsuit that cost $690,000 in legal fees.
Using the straight-line method, calculate the patent's annual amortization expense (in $) for the years before the lawsuit.
Answer by ElectricPavlov(122) (Show Source): You can put this solution on YOUR website!
**1. Calculate Annual Amortization Expense**
* **Formula:**
* Annual Amortization Expense = Purchase Price / Useful Life
* **Values:**
* Purchase Price = $12,000,000
* Useful Life = 15 years
* **Calculation:**
* Annual Amortization Expense = $12,000,000 / 15 years = $800,000 per year
**Therefore, the patent's annual amortization expense for the years before the lawsuit was $800,000.**

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