Respuesta :
Answer:
1 January - Copyright (Dr.) $418,000
Cash (Cr.) $418,000
31 December - Amortization expense (Dr.) $41,800
Accumulated amortization (Cr.) $41,800
where
Dr. = Debit
Cr. = Credit
Explanation:
Copyright is an intangible asset (assets with no physical substance). IAS-38 which deals with intangible assets states that the intangible asset, copyright, recognized on the face of balance sheet should be amortized over its useful life under straight-line method. Amortization should be simply treated as depreciation. It is the systematic allocation of cost to profit or loss statement. The only method that is used to calculate amortization is straight-line method and the formula to it is:
Amortization expense p.a. = Cost / Useful life
⇒ Amortization expense p.a. = 418,000 / 10 = $41,800.
Answer:
1. Entries to record the purchase of the copyright on January 1
Debit: Intangible asset - copyright with $418,000
Credit: Cash with $418,000
2. Entries to record the copyright annual amortization on December 31
(a) Debit: Amortization expenses with $41,800
Credit: Accumulated amortization expenses with 41,800
(b) Debit: Profit and loss account with $41,800
Credit: Amortization expenses with $41,800
Explanation:
1. Entries to record the purchase of the copyright on January 1
DR ($) CR ($)
Intangible asset - copyright 418,000
Cash 418,000
Being the purchase of an intangible asset - copyright
2. Entries to record the copyright annual amortization on December 31
DR ($) CR ($)
Amortization expenses 41,800
Accumulated amortization expenses 41,800
Being the copyright amortization expenses for the year.
Profit and loss account 41,800
Amortization expenses 41,800
Being the copyright annual amortization written off for the year
Note:
The annual amortization expenses is calculated as follows:
Annual amortization = copyright cost ÷ number of its useful life = $418,000 ÷ 10 = $41,800
