Question

Gallery purchases the copyright on a painting for $418,000 on January 1. The copyright is good for 10 more years. The company plans to sell prints for 11 years.
  
Prepare entries to record the purchase of the copyright on January 1 and its annual amortization on December 31.

Answer 1

Even the intangible assets do not have forever they have also life cycle and provide long term benefits to the company and contribution to raise the earning of the organization capabilities example of intangible assets are

-Patents

-Copyright

-Trademarks

-Brands

All are added value to the company and are important in the company's ongoing operations

Journal Entries to Record the Purchase of the Intangible Assets and its Amortization

Date	Accounts Titles and Explanations	Debit	Credit
January 1	Intangible assets (copyright on painting)	$418,000
	Cash		$418,000
	(As purchase of copyright on a painting)
December 31	Amortization Expenses Account	$41,800
	Intangible assets (copyright on painting)		$41,800
	(As Amortization expenses is calculated by divide the cost of assets by the number of years of amortization which is $41,800 ($418,000 / 10 years)

Working:

- First entry is purchase of the intangible assets

- Amortization after the end of the fiscal year by determined the number of years of life of intangible assets WHICH IS 10 YEARS $41,800 ($418,000 / 10)