Question:
Alpha Enterprises acquired a patent from Simpson Research Corporation on 1/1/01 for $4million. The patent will have a useful life of 10 years, even though it's legal life is 20 years. Beta Corporation has made a commitment to purchase the patented product form Alpha for $200,000 at the end of the ten years. Compute Alpha's patent amortization for 2001, assuming the straight-line method is used.