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At the start of the current year, a company paid for the following in cash: Copyrights, $2,000,000 Equipment, $25,000,000 Goodwill, $4,500,000 Inventory, $1,500,000 Land, $15,000,000 Patents, $1,500,000 Prepaid rent, $500,000 Research and development, $500,000 Supplies, $4,000,000 Trademarks, $1,000,000 It amortizes its intangibles over 10 years. Determine its current year amortization expense. Group of answer choices $950,000 $400,000 $500,000 $350,000 $150,000

Respuesta :

jepessoa

Answer:

$350,000

Explanation:

total intangible assets:

Copyrights $2,000,000 (amortizable)

Goodwill $4,500,000 (not amortizable)

Patents $1,500,000 (amortizable)

Trademarks $1,000,000 (not amortizable)

since you can only amortize copyrights and patents, total amortization expense for the year = ($2,000,000 + $1,500,000) x 10% = $350,000

both trademarks and goodwill can be impaired though (impairment costs are evaluated on a yearly basis).

Amortization is the process of lowering down the book value of a loan or intangible asset, when applied to Asset it works similar as Depreciation. The Correct value is $350000.

Amortization

From the given values we can analyse that Intangible assets like Goodwill and Trademarks are not Amortizable. Only Copyrights and Patents from the question can be Amortized.

Thus, Total amortization expense for the year  = (Value of Copyrights plus Value of Patents) × 10%

($2,000,000 + $1,500,000) x 10% = $350,000

Hence, Correct option is C $350,000

Learn More about Amortization here:

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