Question

Jorge purchased a copyright for use in his business in the current year. The purchase occurred on July 15th and the purchase price was $75,000. If the copyright has a remaining life of 75 months, what is the total amortization amount Jorge may deduct during the current year?

Answer 1

$6,000

Step-by-step explanation:

Purchase price = $75,000

Remaining life = 75 months

The amortization amount for each month (Am) is given by the total purchase price divided by the remaining life of the copyright.

`A_m=(\$75,000)/(75)=\$1,000\ per\ month\\`

Since the purchase was made in July, there are 6 months left in the current year. Therefore, Jorge's total amortization amount during the current year is:

`A=6*\$1,000 = \$6,000`