Question

Smitty Museum purchased the copyright to a piece of artwork for $925,000. Smitty plans to reproduce 2.1 million posters of the artwork over a period of 9 years. Calculate the amortization for the year assuming the Museum plans to reproduce and sell 133,000 posters the first year year

Answer 1

Answer:

amoritzation expense 3,268

           copyright                       3,268

Explanation:

We will divide the acquisition cost by the total units of production:

925,000 / 2,100,000 = 0.024571429  this would be the rate per poster

Then we multiply by this year level:

(it is convinient to do all in a single step if using a calculator to avoid any rounding error)

133,000 x 925,000 / 2,100,000 = $3,268.00

amoritzation expense 3,268

           copyright                       3,268