Metlock Industries acquired two copyrights during 2020. One copyright related to a textbook that was developed internally at a cost of $9,300. This textbook is estimated to have a useful life of 3 years from September 1, 2020, the date it was published. The second copyright (a history research textbook) was purchased from University Press on December 1, 2020, for $40,000. This textbook has an indefinite useful life.
Required:
a) How should these two copyrights be reported on Metlock’s balance sheet as of December 31, 2020?

The first book will not be reported on the balance sheet, but the second copyright will be reported at the full purcahse price.

Explanation:

1. A textbook that was developed internally: The $9,300 cost incurred must be expensed. As a result of this. the copyright will only be reported on the income statement but not on the balance sheet.

2. The second copyright (a history research textbook): The $40,000 purchase cost of this will be reported on the balnace sheet in full. But there will not be amortization since it has an indefinite useful life.

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