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Franchise Amortization

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Company bought a window franchise from on January 2, 2010 for $100,000. A research company estimated that the remaining useful life of the franchise was 50 years. Its unamortized cost on the company books at January 1,2010, was $15,000. The company has decided to write off the franchise over the longest possible period. How much should be amortized by the company for the year ended December 31, 2010?

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This solution discusses the amortization of a franchise in depth.

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Intangible assets are classified as either having a definite life or an indefinite life. If the intangible asset has an indefinite life, it is not amortized; instead, it is tested for impairment and its value is adjusted accordingly. If the intangible asset has a ...

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