Select the correct answer: The cost of a patent should be amortized over A) 20 years. B) its useful life. C) the length of its legal life or its useful life. D) the shorter of its legal life or its useful life.

The correct answer is C) the length of its legal life or its useful life. Amortization is the process of spreading the cost of an asset over its useful life. A patent is a legal document that provides the holder exclusive rights to prevent others from making, using, or selling an invention for a certain period of time. Therefore, the cost of a patent should be amortized over the length of its legal life or its useful life, whichever is shorter. The useful life of a patent may vary depending on the type of invention and industry. While the legal life of a patent is usually 20 years from the date of filing, its useful life may be much shorter due to the rapid advancement of technology or changes in market demand. Therefore, it is important to determine the appropriate amortization period for a patent to accurately reflect its value and impact on the company’s financial statements.