Rich Corporation purchased a limited-life intangible asset for $180,000 on May 1, 2006.It has a useful life of 10 years.What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2008?
A)$ -0-.
B)$36,000
C)$48,000
D)$54,000

Question

Quizplus · Accepted Answer

The total amount of amortization expense that should have been recorded on the intangible asset by December 31, 2008, can be calculated using the straight-line method of amortization.

First, we need to calculate the annual amortization expense:

Annual amortization expense = Cost of the asset / Useful life

Annual amortization expense = $180,000 / 10 years = $18,000

Next, we need to calculate the total amortization expense for the period from May 1, 2006, to December 31, 2008:

Total amortization expense = Annual amortization expense x Number of years

Total amortization expense = $18,000 x 2.67 years (from May 1, 2006, to December 31, 2008)

Total amortization expense = $48,060

Therefore, the correct answer is C) $48,000.

Rich Corporation Purchased a Limited-Life Intangible Asset for $180,000 on May