Hepburn Company bought a copyright for $90,000 on January 1, 2006, at which time the copyright had an estimated useful life of 15 years. On January 5, 2009, the company determined that the copyright would expire at the end of 2014. How much should Hepburn record as amortization expense for this copyright for 2009?

Question

Quizplus · Accepted Answer

The correct calculation for amortization expense for 2009 is: [$90,000 - ($6,000 x 3)] / 6 = $12,000. This is because the copyright had already been amortized for the years 2006, 2007, and 2008, leaving a remaining balance of $72,000 ($90,000 - $6,000 x 3). Since the company determined that the copyright would expire at the end of 2014, there are six years remaining (2009-2014), therefore, the annual amortization expense is $12,000 ($72,000/6).

Hepburn Company Bought a Copyright for $90,000 on January 1