Question

On January 1, 2014, Pharoah Company purchased a copyright for $2356000, having an estimated useful life of 16 years. In January 2018, Pharoah paid $381000 for legal fees in a successful defense of the copyright.

(a) Copyright amortization expense for the year ended December 31, 2018, should be __________.

O $147250.

O $0.

O $171063.

O $179000.

Answer 1

The correct is the last option,$179,000

Step-by-step explanation:

The initial amortization expense=$2356000/16=$147.250

After four years additional expense was recorded for $381,000 which need to be added to the carrying value of the copyright

Carrying value=$2356000-($147.250*4)=$1,767,000.00

Plus additional qualifying expense =$381,000

Total carrying amount =$2,148,000.00

Remaining useful life =1 years

Revised amortization =$2,148,000.00/12 years=$179,000

The revised amortization from 2018 onward is $179,000

The last option is the correct answer