Gemcraft Company bought a copyright for$45,000 on January 1, 1997, at which time
ID: 2433742 • Letter: G
Question
Gemcraft Company bought a copyright for$45,000 on January 1, 1997, at which time the copyright had anestimated useful life of 15 years. On January 5, 2000, the companydetermined that the copyright would expire at the end of 2005. Howmuch should Gemcraft record as amortization expense for thiscopyright for 2000? 1) $7,200. 2) $3,600. 3) $4,000. 4) $6,000. Gemcraft Company bought a copyright for$45,000 on January 1, 1997, at which time the copyright had anestimated useful life of 15 years. On January 5, 2000, the companydetermined that the copyright would expire at the end of 2005. Howmuch should Gemcraft record as amortization expense for thiscopyright for 2000? Gemcraft Company bought a copyright for$45,000 on January 1, 1997, at which time the copyright had anestimated useful life of 15 years. On January 5, 2000, the companydetermined that the copyright would expire at the end of 2005. Howmuch should Gemcraft record as amortization expense for thiscopyright for 2000? $7,200. $3,600. $4,000. $6,000. 1) $7,200. 2) $3,600. 3) $4,000. 4) $6,000.Explanation / Answer
Gemcraft Company bought a copyright for$45,000 on January 1, 1997, at which time the copyright had anestimated useful life of 15 years. On January 5, 2000, the companydetermined that the copyright would expire at the end of 2005. Howmuch should Gemcraft record as amortization expense for thiscopyright for 2000? Gemcraft Company bought a copyright for$45,000 on January 1, 1997, at which time the copyright had anestimated useful life of 15 years. On January 5, 2000, the companydetermined that the copyright would expire at the end of 2005. Howmuch should Gemcraft record as amortization expense for thiscopyright for 2000? $7,200. $3,600. $4,000. $6,000.Yearly amortization based on life span of 15years = $45,000 /15 = $3,000
Purchasecost $45,000 Less : Amortized expenses Year1997 $3,000 Year1998 $3,000 Year1997 $3,000 ------------ $9,000 ------------- Book value of Coyright asset as on Jan1,2000 $36,000 ======= Amortized expenses for2000 = $36,000/ 6 (i.e. Year 2000 to Year2005) = $6,000
1) $7,200. 2) $3,600. 3) $4,000. 4) $6,000.
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