Question

Question 1 Parts A and B

A. Hepburn Company bought a copyright for $72,600 on January 1, 2015, at which time the copyright had an estimated useful life of 11 years. On January 5, 2018, the company determined that the copyright would expire at the end of 2021. How much should Hepburn record as amortization expense for this copyright for 2018? (Do not round your intermediate calculation and round your answer to the nearest dollar amount.)

Multiple Choice

• $1,320.

• $13,200.

• $440.

• $6,600.

B. Popeye Company purchased a machine for $320,000 on January 1, 2017. Popeye depreciates machines of this type by the straight-line method over a five-year period using no salvage value. Due to an error, no depreciation was taken on this machine in 2017. Popeye discovered the error in 2018. What amount should Popeye record as depreciation expense for 2018? The tax rate is 40%.

Multiple Choice

• $38,400.

• $64,000.

• $76,800.

• $128,000.

Answer 1

Answer:
A)
Amortization expense per Year                = Cost / useful life                =   $ 72,600 / 11 Years	$ 6,600 per Year
Amortization expense for 2018                = Cost (-) Accumulated Dep. ) / Remaining useful life                =   ( $ 72,600 (-) ( $ 6,600 x 3 Years ) / 4 Years                =     $ 52,800 / 4 Years	$ 13,200
Option (b) is Correct
B)
Amount that Should be recorded as Depreciation Expense                       = ( Cost (-) Salvage Value ) / Useful Life                       = ( $ 320,000 (-) $ 0 ) / 5 Years	$ 64,000
Reason: Since Straight line Method is Used. Same Amount is Charged
Option (b) is Correct