Question 10.5: Part 1. A publisher purchases the copyright on a book for $1...

Fundamental Accounting Principles

Part 1. A publisher purchases the copyright on a book for $1,000 on January 1 of this year. The copyright lasts five more years. The company plans to sell prints for seven years. Prepare entries to record the purchase of the copyright on January 1 and its annual amortization on December 31.

Part 2. On January 3 of this year, a retailer pays $9,000 to modernize its store. Improvements include lighting, partitions, and a sound system. These improvements are estimated to yield benefits for five years.
The retailer leases its store and has three years remaining on its lease. Prepare the entry to record (a) the cost of modernization and (b) amortization at the end of this year.

Part 3. On January 6 of this year, a company pays $6,000 for a patent with a remaining 12-year legal life to produce a supplement expected to be marketable for 3 years. Prepare entries to record its acquisition and the December 31 amortization entry.

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