Question

Shamrock Industries acquired two copyrights during 2020. One copyright related to a textbook that was developed internally at a cost of $16,500. This textbook is estimated to have a useful life of 5 years from September 1, 2020, the date it was published. The second copyright (a history research textbook) was purchased from University Press on December 1, 2020, for $30,000. This textbook has an indefinite useful life.

How should these two copyrights be reported on Shamrock's balance sheet as of December 31, 2017?
Copyright No. 1 $ __________ __________
Copyright No. 2 $ __________ __________

Answer 1

Answer: Copyright 1 - $0

Copyright 2 - $30000

Step-by-step explanation:

Copyright 1 shouldn't be reported on the balance sheet. This is because the cost with regards to internally developed copyright will have to be expensed. Therefore, copyrights 1 on the balance sheet will be $0.

Copyright 2 will be reported on the balance sheet with a value of $30000. The copyright's cost of acquisition will have to be capitalized.