On February 12, MVP Publishing, Inc. purchased the copyright to a book for $15,000 and agreed to pay royalties equal to 10% of book sales, with a guaranteed minimum royalty of $60,000. MVP had book sales of $800,000 during the year. In its year-end income statement, what amount should MVP report as royalty expense?
　　a.$75,000
　　b.$95,000
　　c.$80,000
　　d.$60,000
　　Answer:C
　　Choice "C" is correct. Royalty expense is the larger of minimum royalties of $60,000, or 10% of $800,000 sales, $80,000.
　　Choice "d" is incorrect. The minimum royalty would be the expense if actual royalties were less than $60,000.
　　Choice "a" is incorrect. The minimum royalty would be the expense if actual royalties were less than $60,000. The copyright should be recorded as an intangible asset, not royalty expense.
　　Choice "b" is incorrect. The copyright should be recorded as an intangible asset, not as royalty expense.