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

Amortization decreases assets (copyright) and increases expenses, which decreases net income and equity. It does not affect cash flows.

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