Let's read through the workout. A radio station purchases a license, complete the table using the information below So the information given here is a license cost, estimated life in the years of that license and salvage value We're asked to fill in the gross value of intangibles the amortization expense, amortization accumulated (or accumulated amortization) and net intangibles So let's start with the gross intangibles. Gross intangibles, that's the original cost and it won't change as long as you own that asset So that is just going to be the 900,000. I'm going to lock on the 900,000 so when I copy this to the right we will stay on cell C7 Now the amortization expense, I need to use my formula here. I'm going to use a similar formula when calculating depreciation This formula says that you take the original cost and you subtract off any salvage value That gives you the amount that you're looking to amortize in total So I'm saying that the value of the license will drop by 850,000 over the 8 years That's my next step, I need to divide by the 8 years Again you'll notice I've locked on those cells, so that we stay in C7, C9 and C8 as we copy to the right Great! My amortization expense is calculated as 106,250 I'm just to copy those to the right and reveal my formulas for each of them Now the accumulated amortization in year 1 is just going to be equal to the amortization expense in year 1 There's only been one year's amortization However in the next year (year 2), I'm going to find the accumulated amortization equals last year's accumulated plus this year's amortization expense It has in effect doubled and gone up to 212,500 I can now calculate the net intangibles. The net intangibles is going to be gross intangibles minus the accumulated amortization So at the end of year 1, we're saying we have book value or carrying value on our balance sheet of net intangibles of 793,750 I can copy that to the right and we can see that value goes down as the accumulated amortization goes up I can now copy all those year 2 figures to the right. All of those formulas should copy to the right as well And I want to try and predict what the value of net intangibles will be in year 8 Well if everything works out correctly then we should get down to the salvage value of 50,000 That's what I'm amortizing my way down to So copy that to the right and indeed we do Net intangibles goes down from 900,000 originally, down to 50,000 at the end