On January 2, 2014, Klein Co. bought a trademark from Royce, Inc. for $1,600,000. An independent research company estimated that the remaining useful life of the trademark was 10 years. Its unamortized cost on Royce's books was $1,200,000. In Klein's 2014 income statement, what amount should be reported as amortization expense?

Question

Quizplus · Accepted Answer

The correct amortization expense is $160,000, calculated by dividing the cost of the trademark ($1,600,000) by its remaining useful life (10 years).