On January 1, Year 1, the Vanguard Company purchased a copyright for $12,000. Vanguard estimated the remaining useful life of the copyright to be 6 years. Which of the following correctly shows the effect of the first year's amortization of Vanguard's copyright?

A) Option A
B) Option B
C) Option C
D) Option D

Question

On January 1, Year 1, the Vanguard Company purchased a copyright for $12,000. Vanguard estimated the remaining useful life of the copyright to be 6 years. Which of the following correctly shows the effect of the first year's amortization of Vanguard's copyright?

A) Option A 
B) Option B 
C) Option C 
D) Option D

Quizplus · Accepted Answer

The correct calculation for the first year's amortization is ($12,000/6 years) = $2,000 amortization expense for Year 1. Option B correctly reflects this by deducting $2,000 from the copyright asset account and adding $2,000 to the accumulated amortization account, resulting in a net book value of $10,000. Option A adds the $2,000 to the copyright asset account, which is incorrect as it would increase the value of the asset instead of reducing it. Option C subtracts the $2,000 from the accumulated amortization account, which would decrease the value of the accumulated amortization account instead of increasing it. Option D subtracts $2,000 from both the asset and accumulated amortization accounts, resulting in a net book value of $8,000 which is incorrect.

On January 1, Year 1, the Vanguard Company Purchased a Copyright