At the end of 2017,Mirror Productions determined that one of its copyrights was worthless.The copyright had a cost of $320,000.The copyright had been amortized for eight years of its estimated 25-year legal life.Which of the following statements is the justification for removing the remaining cost of the copyright from the accounting records?
A)The copyright no longer represents a future benefit to the company.
B)The federal government does not allow copyrights to be recorded as assets once they are deemed worthless.
C)The cost of the copyright represents an obligation to return capital contributions to the stockholders.
D)The cost of the copyright has usefulness that will impact the net income of future accounting periods.

Question

Quizplus · Accepted Answer

The fact that the copyright is deemed worthless indicates that it no longer represents a future benefit to the company. As such, it should be removed from the accounting records through a write-off or impairment. Choice B is incorrect because the federal government has no policy prohibiting the recording of worthless copyrights. Choice C is irrelevant because the cost of the copyright does not represent an obligation to return capital contributions to the stockholders. Finally, choice D is incorrect because a worthless asset will not impact the net income of future accounting periods.

At the End of 2017,Mirror Productions Determined That One of Its