Question

Smitty Museum purchased the copyright to a piece of artwork for $897,000. Smitty plans to reproduce 1.8 million posters of the artwork over a period of 12 years. Calculate the amortization for the year assuming the Museum plans to reproduce and sell 125,000 posters the first year.

Answer 1

Annual amortization= $62,291.67

Step-by-step explanation:

Giving the following information:

Purchase price= $897,000

Smitty plans to reproduce 1.8 million posters of the artwork for 12 years.

To calculate the amortization, we need to use the following formula:

Annual amortization= (original cost/total estimated production)*production for the year

Annual amortization= (897,000/1,800,000)*125,000

Annual amortization= $62,291.67