Question

Exercise 8-19 Amortization of intangible assets LO P4 Milano Gallery purchases the copyright on a painting for $418,000 on January 1. The copyright is good for 10 more years. The company plans to sell prints for 11 years. Prepare entries to record the purchase of the copyright on January 1 and its annual amortization on December 31.

Answer 1

Jan 01

Dr Copyright $418,000

Cr Cash $418,000

Dec 31

Dr Amortization expense—Copyright $41,800

Cr Accumulated amortization—Copyright $41,800

Step-by-step explanation:

Preparation of entries to record the purchase of the copyright on January 1 and its annual amortization on December 31.

Jan 01

Dr Copyright $418,000

Cr Cash $418,000

(To record purchase of copyright )

Dec 31

Dr Amortization expense—Copyright $41,800

Cr Accumulated amortization—Copyright $41,800

($418,000/10 years)

(To record amortization expense of copyright )