Accounting · Amortisation and Non-Current Assets
Willow Co. purchased a five-year manufacturing licence on 1 July 20X0 for $2,000,000. It cannot be renewed at the end of its term. Calculate the amortisation charge for the year ended 30 June 20X1 and the carrying amount of the licence at that date using the straight-line method.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Amortisation charge: $200,000; Carrying amount: $1,500,000
- 2Amortisation charge: $400,000; Carrying amount: $1,700,000
- 3Amortisation charge: $300,000; Carrying amount: $1,600,000
- 4Amortisation charge: $400,000; Carrying amount: $1,600,000✓
Correct answer
Amortisation charge: $400,000; Carrying amount: $1,600,000
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