On January 2 2022 Dabney Company purchased a copyright from North Company for $200000.The copyright was recorded on North's books for $160000.It is estimated that the copyright has a remaining useful life of 2 years.Use the following tabular analysis to make the adjustment for amortization expense on Dabney's books for the year 2022.
A)Increase Expenses and decrease Cash $100000.
B)Increase Revenue $40000 increase Patent $160000 and decrease Cash $200000.
C)Increase Expenses and decrease Patents $80000.
D)Increase Expenses and decrease Patents $100000.

Question

On January 2 2022 Dabney Company purchased a copyright from North Company for $200000.The copyright was recorded on North's books for $160000.It is estimated that the copyright has a remaining useful life of 2 years.Use the following tabular analysis to make the adjustment for amortization expense on Dabney's books for the year 2022. 
A)Increase Expenses and decrease Cash $100000. 
B)Increase Revenue $40000 increase Patent $160000 and decrease Cash $200000. 
C)Increase Expenses and decrease Patents $80000. 
D)Increase Expenses and decrease Patents $100000.

Quizplus · Accepted Answer

The correct adjustment for amortization expense would be to increase Expenses and decrease Patents for $100000. This is because the cost of the copyright ($200000) needs to be spread over its remaining useful life of 2 years, resulting in an annual amortization expense of $100000. This would decrease the value of Patents on Dabney's books to reflect the portion of the asset that has been expensed over time.

On January 2 2022 Dabney Company Purchased a Copyright from North