A company pays $1,200,000 to buy the copyright for a movie. The movie was made years ago, and was very popular at the time of its release. It earned a lot of revenue at the time of its original release. Most movies have a big revenue at the time of release, and then not much afterward, but this particular movie has surprised many in the movie industry because it has been having steady income since the third year after its release. Sure, the annual income goes up and down some, but not by very much.

There have been changes in U.S. copyright law for motion pictures, depending on whether they were copyrighted before 1978, whether they were affected by the 1994 Uruguay Round Agreements, and for other reasons. For our purposes, let us assume that the copyright has fifteen years remaining in its legal and useful life when the company buys the copyright.

Part a. Make the appropriate journal entry to record that the company bought the copyright for the movie. If no journal entry should be made, explicitly say that no journal entry should be made.

Part b. Make the appropriate journal entry to record that the copyright will not last forever. If no journal entry should be made, explicitly say that no journal entry should be made.

Accounting