Whispering Recording Company (WRC) acquired the following assets at the beginning of 2006:
1. The patent to manufacture a revolutionary compact disc. The purchase price was $2,300,000, and there are 16 years remaining in the legal life of the patent.
2. The copyright to an album by the newest country western group, Best of the West. The total amount spent to obtain the copyright was $480,000. The album is expected to be produced for three years, but royalties from the album are expected to continue for 10 years.
3. The copyright to a music video by the hottest new female vocalist, Flamingo, was purchased by WRC for $1,000,000. The video is expected to be produced for two years. However, royalties from the video are expected to continue for six years.
A. Assuming WRC uses the straight-line method of amortization, determine the amortization expense for 2006 for each of these assets.
B. Give the journal entry to record the 2006 amortization expense for the patent.
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