Rich Corporation purchased a limited-life intangible asset for $180,000 on May 1, 2006. It has a useful life of 10 years. What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2008?
$ -0-
$36,000
$48,000
$54,000
To determine the total amount of amortization expense that should have been recorded on the intangible asset by December 31, 2008, we need to calculate the annual amortization expense and multiply it by the number of years that have passed.
First, let's determine the annual amortization expense:
Amortization expense = Cost of intangible asset / Useful life
Amortization expense = $180,000 / 10 years
Amortization expense = $18,000 per year
Next, let's determine the number of years that have passed from May 1, 2006, to December 31, 2008:
Number of years = 2008 - 2006
Number of years = 2 years
Finally, let's calculate the total amount of amortization expense:
Total amortization expense = Annual amortization expense * Number of years
Total amortization expense = $18,000 per year * 2 years
Total amortization expense = $36,000
Therefore, the total amount of amortization expense that should have been recorded on the intangible asset by December 31, 2008, is $36,000.
So, the correct answer is $36,000.