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At what amount should the patent be carried on the December

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Reference no: EM132631954

Question - Oriole Company acquired a patent on an oil extraction technique on January 1, 2020 for $7650000. It was expected to have a 10 year life and no residual value. Oriole uses straight-line amortization for patents. On December 31, 2021, the future cash flows expected from the patent were $945000 per year for the next eight years. The present value of these cash flows, discounted at Oriole's market interest rate, is $4275000. At what amount should the patent be carried on the December 31, 2021 balance sheet?

a. $4275000.

b. $6120000.

c. $7650000.

d. $7560000.

Reference no: EM132631954

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