Question

Milano Gallery purchases the copyright on an oil painting for $480,000 on January 1, 2017. The copyright legally protects its owner for 12 more years. The company plans to market and sell prints of the original for 19 years. Prepare entries to record the purchase of the copyright on January 1, 2017, and its annual amortization on December 31, 2017.

Answer 1

Jan.1

Dr Copyright 480,000

Cr Cash 480,000

Dec.31

Dr Amortization Expense - Copyright 40,000

Cr Accumulated Amortization - Copyright 40,000

Step-by-step explanation:

Milano Gallery Journal entry

Jan.1

Dr Copyright 480,000

Cr Cash 480,000

Dec.31

Dr Amortization Expense - Copyright 40,000

Cr Accumulated Amortization - Copyright 40,000

Amortization Expense of Copyright ($480,000 / 12 years)

=$40,000