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Question
On January 2, 2008 Lamp, Inc. purchased a patent for a new consumer product for $120,000. At the time of purchase, the patent was valid for 14 years; however, the patent's useful life was estimated to be only 10 years due to the competitive nature of the product. On December 31, 2011 the product was permanently withdrawn from sale under governmental order because of a potential health hazard in the product.
Required:
a. Record any loss on impairment that Lamp should record in 2011 related to this patent.
b. What should the total charge against income be in 2011 on this patent?
Answer
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