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 expense Jorge may deduct during the current year? (Assume not in an asset acquisition to which §197 applies)

a. $0.
b. $12,000.
c. $5,500.
d. $6,000.
e. None of the choices are correct.

Answer 1

The total amortization expense for Jorge's copyright purchase in the current year, given a 75-month remaining life and a purchase date of July 15th, is $5,500.

Step-by-step explanation:

Jorge has purchased a copyright for his business, with a remaining life of 75 months at a purchase price of $75,000. The total amortization expense for the current year is calculated by dividing the purchase price by the number of months in the copyright's remaining life, then multiplying by the number of months left in the year from the purchase date.

The calculation is as follows: $75,000 / 75 months = $1,000 per month. Since the purchase was made on July 15th, there are 5.5 months remaining in the year (half of July, plus August through December). Thus, the total amortization expense for the current year is $1,000 * 5.5 months = $5,500.