Question

On May 1, 2017, Crane Company purchased the copyright to Blue Spruce Corp. for $112800. It is estimated that the copyright will have a useful life of 4 years. The amount of amortization expense recognized for the year 2017 would be:_______. a) $28200 b) $15040 c) $18800. d) $14100.

Answer 1

Answer:

$18,800

Explanation:

The amortization expense can be calculated by dividing the cost of copyright to purchase by the estimated useful life and then multiplied by the number of months covered until May 1, 2017.

Amortization expense =  Cost to purchase  / Estimated useful life) x 8/12 Amortization expense = ($112,800 / 4 years) * 8/12

Amortization expense = $18,800

As the copyright is purchased on may 1 it will cover 8 months till 31 december 2017