On October 1 2017 Kingsway Broadcasting purchased for 410000

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.)

Solution

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)