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Blossom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2020 for...

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Accounting

Blossom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2020 for $4350000. It was expected to have a 10 year life and no residual value. Blossom uses straight-line amortization for patents. On December 31, 2021, the future cash flows expected from the patent were $270000 per year for the next eight years. The present value of these cash flows, discounted at Blossoms market interest rate, is $1360000. At what amount should the patent be carried on the December 31, 2021 balance sheet?

$1360000.

$4350000.

$3480000.

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2022 Balance Sheet