A copyright is a legal protection preventing others from publishing or reproducing works of authorship. A work of authorship can include poetry, novels, plays, computer software and architectural drawings. A person who creates a work of authorship has a copyright the moment the work is created and is fixed in a form that either a person or machine can read. As a result, an author does not have to register their work with the U.S. Copyright Office. Formally registering a work is generally recommend because it provides additional legal protection against those who would copy the work.
A copyright only lasts so long, but how long it lasts depends on several factors. Generally, most copyrights last for the duration of an author's life plus 70 years. If it is an anonymous work or something done for hire, the copyright lasts for 95 years after it was published or 120 years from the year it was created.
Valuing a Copyright
The value a business attaches to a copyright depends on how it was acquired. If the business developed the work in question, the value of the copyright is equal to the cost the business incurred securing the copyright. This would include any legal or application fees it might have incurred to obtain the copyright.
If the business purchased the copyright from another company, the business will record the acquired asset at it acquisition cost.
Amortizing a Copyright
Since a copyright eventually terminates, it is amortized. This means that every year the value of the copyright on the company's books will decrease. The business will record an amortization expense to reflect the decrease in the asset's value. Generally, an intangible asset like a copyright is amortized via the straight-line method. This means that the book value of the copyright is divided by the useful life of the copyright to determine the amortization amount. The useful life determines how long the business expects the copyright to provide it revenue, and therefore may not equal the full term of the copyright.
Every year, the amortization amount is subtracted from the value of the copyright and is listed as an expense. This continues until the value of the copyright equals zero.