Smitty Museum purchased the copyright to a piece of artwork for $922,000

Finance Mar 24, 2021

Smitty Museum purchased the copyright to a piece of artwork for $922,000. 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 130,000 posters the first year.

a. $78,633

b. $76,833

c. $66,589

d. $74,125

e. $0, copyrights are not amortized.

Expert Solution

Answer:

b . $ 76,833

Step-by-Step explanation

Amortization per year for the copyright will be calculated using the following formula -

(Cost of an asset - Salvage value) / Life of an asset

= $922,000 / 12

= $76,833 per year.

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