Jeff Corporation purchased a limited-life intangible asset for $120,000 on May 1, 2009.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, 2011?

Question

Quizplus · Accepted Answer

The annual amortization expense is calculated by dividing the purchase price by the useful life. In this case, the annual amortization expense is $120,000 ÷ 10 = $12,000. 
From May 1, 2009 to December 31, 2011, there are 2 years and 8 months, or 32 months. 
Therefore, the total amount of amortization expense should have been recorded on the intangible asset by December 31, 2011 is $12,000 × (32 ÷ 12) = $32,000 (rounded to the nearest dollar). 
So, the correct choice is C.

Jeff Corporation Purchased a Limited-Life Intangible Asset for $120,000 on May