Question

Jorge purchased a copyright for use in his business in the current year. The purchase occurred on July 15th and the purchase price was $75,000. If the copyright has a remaining life of 75 months, what is the total amortization amount Jorge may deduct during the current year?

Answer 1

Answer:

$6,000

Explanation:

Purchase price = $75,000

Remaining life = 75 months

The amortization amount for each month (Am) is given by  the total purchase price divided by the remaining life of the copyright.

$A_m=\frac{\ 75,000}{75}=\ 1,000\ per\ month$

Since the purchase was made in July, there are 6 months left in the current year. Therefore, Jorge's total amortization amount during the current year is:

$A=6*\ 1,000 = \ 6,000$