Question

On July 1, 2015, James Ltd purchased a copyright for $30,000. It is estimated that the copyright will have a useful life of 4 years with an estimated residual value of $2,000. The amount of accumulated amortisation as at 31 December 2017 would be:

Select one:
a. $10,500.
b. $14,000.
c. $17,500.
d. $21,000

Answer 1

The amount of accumulated amortization as at 31 December 2017 would be $14,000.

Step-by-step explanation:

The amount of accumulated amortization as at 31 December 2017 would be $14,000. to calculate the accumulated amortization, we need to determine the annual amortization expense. The copyright was purchased for $30,000 and has a useful life of 4 years, meaning it will be amortized over 4 years. The annual amortization expense can be calculated as follows:

Annual Amortization Expense = (Cost - Residual Value) / Useful Life =$30,000 - $2,000 / 4 = $7,000.Since two full years have passed since the purchase of the copyright, the accumulated amortization to date would be twice the annual amortization expense: $7,000 x 2 = $14,000.