On January 2, 2007, Klein Co.bought a trademark from Royce, Inc.for $500,000.An independent research company estimated that the remaining useful life of the trademark was 10 years.Its unamortized cost on Royce's books was $400,000.In Klein's 2007 income statement, what amount should be reported as amortization expense?
A)$50,000.
B)$40,000.
C)$25,000.
D)$20,000.

Question

Quizplus · Accepted Answer

The trademark should be amortized over its estimated useful life of 10 years. Therefore, the annual amortization expense is $500,000 / 10 = $50,000.