Bricktown Exchange purchases a copyright for $50,000.The copyright has a remaining legal life of 25 years,but only an expected useful life of five years with no residual value.Assuming the company uses the straight-line method,what is the carrying value at the end of the first year?

Question

Quizplus · Accepted Answer

Using the straight-line method, we can calculate the annual depreciation as follows:
Annual Depreciation = (Cost - Residual Value) / Useful Life
Annual Depreciation = ($50,000 - $0) / 5 years = $10,000 per year
Therefore, the carrying value at the end of the first year can be calculated as:
Carrying Value = Cost - Accumulated Depreciation
Carrying Value = $50,000 - $10,000 = $40,000
Therefore, the correct answer is D.

Bricktown Exchange Purchases a Copyright for $50,000