Answer:
Royalty expense = $140,000
Explanation:
The royalty expense consists of 2 components.
A fixed amount of $60,000
A variable amount as 10% of sales.
Total royalty expense attributable to income statement is
Royalty expense = 60,000 + (800,000*0.10)
Royalty expense = $140,000
This is the amount deductible in income statement.
The copyright purchase of $15,000 is a company asset, recorded in balance sheet.
Hope that helps.
