What is the primary basis for calculating the amortization expense of a patent?

The primary basis for calculating the amortization expense of a patent is associated with the patent's purchase price divided by its useful life. Amortization is a method of allocating the cost of an intangible asset over its useful life. This is important because it reflects the consumption of the patent's economic benefits over time.

When a company acquires a patent, it incurs a cost that is capitalized on the balance sheet, and this cost must be expensed systematically over the period that the patent is expected to provide value to the company. The useful life of a patent is determined based on factors such as the expected duration of its utility in generating cash flows, which is distinct from its legal life (the maximum time it can be protected by law).

This approach ensures that the amortization expense aligns with the revenue generated from using the patent, providing a more accurate representation of the company's financial performance. The other options present alternatives that do not accurately reflect GAAP guidelines for amortization accounting for patents.