Question

On October 1, 2017, Kingsway Broadcasting purchased for $410,000 the copyright to publish the music composed by a local Celtic group. Kingsway expects the music to be sold over the next five years. The company uses the straight-line method to amortize intangibles.

Required:
Prepare entries to record:
a. The purchase of the copyright. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)

b. The amortization for the year ended December 31, 2017, calculated to the nearest whole month. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)

Answer 1

	Calculation of Depreciation as per straight line Depreciation
	Cost of Purchase of Copyrights	$            4,10,000.00
	Less : Salvage Value	$                               -
	Value for Depreciation	$            4,10,000.00
	Life of the Building is =	5 Years
	Depreciation Per the year = ($430,000 / 5 Years)	$                82,000.00
	Depreciation for the 3 months = $ 82,000 X 3 /12 =	$                20,500.00
Journal Entries
Date	Account Title and explanation	Debit	Credit
October 01, 2017	Copyrights	$                  4,10,000
	To Cash		$                4,10,000
	(To Record the purchase of copyrights)
December 31, 2017	Amortization - Copyrights	$                      20,500
	To Copyrights		$                    20,500
	(to record the depreciaition of the 3 months)