On January 1, 2011, Russell Company purchased a copyright for $1,500,000, having an estimated useful life of 16 years. In January 2015, Russell paid $225,000 for legal fees in a successful defense of the copyright. Copyright amortization expense for the year ended December 31, 2015, should be

Question

Quizplus · Accepted Answer

First, we need to calculate the annual amortization expense for the copyright.

$1,500,000 / 16 years = $93,750 per year

Next, we need to add the legal fees paid in 2015 to the carrying value of the copyright:

$1,500,000 - ($93,750 x 4 years) + $225,000 = $828,750

Finally, we divide the carrying value by the remaining useful life:

$828,750 / 8 years = $103,594

Rounded to the nearest thousand, the answer is $112,500.

On January 1, 2011, Russell Company Purchased a Copyright for $1,500,000