Rich Corporation purchased a limited-life intangible asset for $210,000 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 formula for calculating annual amortization expense for a limited-life intangible asset is: Cost of Intangible Asset / Useful Life.
So, in this case, the annual amortization expense would be $210,000 / 10 = $21,000.
From May 1, 2009 to December 31, 2011, there would be a total of 2 years and 8 months, or 32 months.
Therefore, the total amount of amortization expense that should have been recorded on the intangible asset by December 31, 2011, would be $21,000 x (32/12) = $56,000. 
Therefore, the correct answer is C.

Rich Corporation Purchased a Limited-Life Intangible Asset for $210,000 on May