Choice "A" is correct. Under U.S. GAAP, the research and development costs should be expensed. The patent will be capitalized and amortized over 10 years (the lesser of legal life or economic life). Current year amortization equals $1,700 ($34,000/10 x 6/12). The patent balance at year-end is $32,300 ($34,000 - $1,700).
Choice "d" is incorrect. The amortization should be calculated based on the lesser of legal life or economic life.
Choice "c" is incorrect. The research and development costs should not be capitalized as part of the cost of the patent.
Choice "b" is incorrect. The research and development costs should not be capitalized as part of the cost of the patent.