Question

on april 1st, 2012 the tate gallery paid $300,000 to acquire a copyright on one of the paintings in its collection. the gallery estimated the copyright's remaining economic life to be fifteen years. the copyright's remaining legal life is twenty years. the tate gallery's fiscal year ends on december 31st. the copyright's book value as of december 31st, 2015 was

Answer 1

The book value of the copyright as of December 31st, 2015 is $220,000.

Step-by-step explanation:

The book value of the copyright as of December 31st, 2015 can be determined using the straight-line amortization method. The initial cost of the copyright was $300,000 and the estimated remaining economic life is 15 years. Therefore, the annual amortization expense is $300,000 / 15 years = $20,000.

Since the fiscal year ends on December 31st, there are 4 years between April 1st, 2012 (acquisition date) and December 31st, 2015. The accumulated amortization would be $20,000/year x 4 years = $80,000.

The book value of the copyright as of December 31st, 2015 is the initial cost of the copyright minus the accumulated amortization, which is $300,000 - $80,000 = $220,000.