On October 1, 2018, Benji Corporation purchased a copyright for $100,000. It is estimated that the copyright will have a useful life of 8 years with no residual value. The amount of amortization expense recognized for the calendar year 2018 would be
A) $0.
B) $3,125.
C) $1,042.
D) $100,000.

Question

Quizplus · Accepted Answer

The copyright has a useful life of 8 years, so the annual amortization expense is $100,000 / 8 = $12,500. Since the copyright was purchased on October 1, 2018, only 3 months of amortization expense is recognized in 2018. Therefore, the amortization expense recognized for the calendar year 2018 is $12,500 * 3/12 = $3,125.

On October 1, 2018, Benji Corporation Purchased a Copyright for $100,000