The following exercise is about amortizing copyrights and trademarks.

1. Fulton Publishing Company purchased the copyright to a basic computer textbook for $80,000. The usual life of a textbook is about four years. However, the copyright will remain in effect for another 50 years. Calculate the annual amortization of the copyright.

2. Sloan Company purchased a trademark from a well-known supermarket for $640,000. The management of the company argued that the trademark’s useful life was indefinite. Explain how the cost should be accounted for.