Question

These are selected 2017 transactions for Martinez Corporation: Jan. 1 Purchased a copyright for $162,500. The copyright has a useful life of 5 years and a remaining legal life of 33 years. Mar. 1 Purchased a patent with an estimated useful life of 6 years and a legal life of 21 years for $96,840. Sept. 1 Purchased a small company and recorded goodwill of $150,950. Its useful life is indefinite. Indicate the amount of amortization expense on December 31, 2017, for Martinez Corporation. * Amortization expense 33,500

Answer 1

Annual amortization of copyrights = Cost of copyright/Useful life

= 162,500/5

= $32,500

Annual amortization of patent = Cost of patents/Useful life

= 96,840/6

= $16,140

Amortization of patent for 2017 = 16,140 x 10/12

= $13,450

Amortization expense for 2017 =  Amortization of copyrights +  Amortization of patent

= 32,500 + 13,450

= $45,950

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