a. On January 1, 2024, UTS completed the purchase of Heinrich Corporation for $3,153,000 in cash. The fair value of the net Identifiable assets of Heinrich was $2,850,000. b. Included in the assets purchased from Heinrich was a patent valued at $91,200. The original legal life of the patent was 20 years; there are 12 years remaining, but UTS believes the patent will be useful for only eight more years. c. UTS acquired a franchise on July 1, 2024, by paying an initial franchise fee of $356,000. The contractual life of the franchise Is 10 years. Required: 1. Record amortization expense for the Intangible assets at December 31, 2024. 2. Prepare the intangible asset section of the December 31, 2024, balance sheet. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the intangible asset section of the December 31, 2024, balance sheet.

a. On January 1, 2024, UTS completed the purchase of Heinrich Corporation for $3,153,000 in cash. The fair value of the net Identifiable assets of Heinrich was $2,850,000. b. Included in the assets purchased from Heinrich was a patent valued at $91,200. The original legal life of the patent was 20 years; there are 12 years remaining, but UTS believes the patent will be useful for only eight more years. c. UTS acquired a franchise on July 1, 2024, by paying an initial franchise fee of $356,000. The contractual life of the franchise Is 10 years. Required: 1. Record amortization expense for the Intangible assets at December 31, 2024. 2. Prepare the intangible asset section of the December 31, 2024, balance sheet. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the intangible asset section of the December 31, 2024, balance sheet.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 8P

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The following intangible assets were purchased by Goldstein Corporation: A. A patent with a remaining legal life of twelve years is bought, and Goldstein expects to be able to use it for seven years. B. A copyright with a remaining life of thirty years is purchased, and Goldstein expects to be able to use it for ten years. For each of these situations, determine the useful life over which Goldstein will amortize the intangible assets.
For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a seventeen-year remaining legal life was purchased for $850,000. The patent will be usable for another six years. B. A patent was acquired on a new tablet. The cost of the patent itself was only $12,000, but the market value of the patent is $150,000. The company expects to be able to use this patent for all twenty years of its life.
Petes Petroleum, Inc., an SEC registrant with a calendar year-end, is in the business of constructing and operating offs] lore oil platforms. Petes Petroleum is required legally to dismantle and remove the platforms at the end of their useful lives, which is estimated to be 10 years. On January 1, 2019, Pete constructed and began operating an offshore oil platform off the coast of Brazil. The total capitalized cost to construct the platform was 3,700,000. In addition, while the future cost of dismantling the oil platform is difficult to estimate, Pete believes there is a 40% chance that the future cost will be 1,425,000, a 40% chance it will be 1,650,000, and a 20% chance that it will cost 2,125,000. The appropriate discount rate is 12%, and Pete uses the straight-line method of depreciation. Required: 1. Prepare the journal entries that Pete should record in 2019 related to the oil platform. 2. Prepare an amortization schedule for the asset retirement obligation. 3. Next Level Prepare a table showing the effect of accounting for the asset retirement obligation on assets, liabilities, shareholders equity, and net income relative to accounting for the associated costs at the end of the assets service life when the expenditure is made.
The following intangible assets were purchased by Hanna Unlimited: A. A patent with a remaining legal life of twelve years is bought, and Hanna expects to be able to use it for six years. It is purchased at a cost of $48,000. B. A copyright with a remaining life of thirty years is purchased, and Hanna expects to be able to use it for ten years. It is purchased for $70,000. Determine the annual amortization amount for each intangible asset.
For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.
Calico Inc. purchased a patent on a new drug it created. The patent cost $12,000. The patent has a life of twenty years, but Calico expects to be able to sell the drug for fifty years. Calculate the amortization expense and record the journal for the first years expense.
On January 1, 2020, Ella Company acquired the following intangible assets: • A trademark for P2,000,000. The trademark has 8 years remaining in its legal life. It is anticipated that the trademark will be renewed in the future, indefinitely, without a problem. • A patent for P4,000,000. Because of market condition, it is expected that the patent will have economic life for just 5 years, although the remaining legal life is 10 years. On December 31, 2020, the intangible assets are assessed for impairment. Because of a decline in the economy, the trademark is expected to generate cash flows of just P120,000 per year. The useful life of the trademark still extends beyond the foreseeable horizon. The cash flows expected to be generated by the patent are P500,000 annually for each of the next four years. The appropriate discount rate for all intangible assets is 8%. Ella Company shall recognized a total impairment loss in 2020 at a. P2,045,000 b. P1,545,000 c. P2,845,000 d. P1,980,000
On January 1, 2020, Ella Company acquired the following intangible assets:• A trademark for P2,000,000. The trademark has 8 years remaining in its legal life. It is anticipated that the trademark will be renewed in the future, indefinitely, without a problem.• A patent for P4,000,000. Because of market condition, it is expected that the patent will have economic life for just 5 years, although the remaining legal life is 10 years.On December 31, 2020, the intangible assets are assessed for impairment. Because of a decline in the economy, the trademark is expected to generate cash flows of just P120,000 per year. The useful life of the trademark still extends beyond the foreseeable horizon. The cash flows expected to be generated by the patent are P500,000 annually for each of the next four years.The appropriate discount rate for all intangible assets is 8%. Ella Company shall recognized a total impairment loss in 2020 at If the entity is an SME, what is the carrying value of the…
On January 1, 2020, Ella Company acquired the following intangible assets: • A trademark for P2,000,000. The trademark has 8 years remaining in its legal life. It is anticipated that the trademark will be renewed in the future, indefinitely, without a problem. • A patent for P4,000,000. Because of market condition, it is expected that the patent will have economic life for just 5 years, although the remaining legal life is 10 years. On December 31, 2020, the intangible assets are assessed for impairment. Because of a decline in the economy, the trademark is expected to generate cash flows of just P120,000 per year. The useful life of the trademark still extends beyond the foreseeable horizon. The cash flows expected to be generated by the patent are P500,000 annually for each of the next four years. The appropriate discount rate for all intangible assets is 8%. Ella Company shall recognized a total impairment loss in 2020 at a. P2,045,000 b. P1,545,000 c. P2,845,000 d. P1,980,000…
On January 1, 2007, Taft Co. purchased a patent for 714,000. The patent is being amortized over its remaining legal life of fifteenyears expiring on January 1, 2022. During 2010, Taft determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2010?a.428,400b.489,600c.504,000d.523,600
On December 31, 2020, Zari Company acquired the following intangible assets:• A trademark for P3,000,000. The trademark has 8 years remaining in its legal life. It is anticipated that the trademark will be renewed in the future, indefinitely, without problem. ,• A patent for P2,000,000. Because of market conditions, it is expected that the patent will have economic life for just 5 years, although the remaining legal life is 10 years.Because of a decline in the economy, the trademark is now expected to generate cash flows of just P120,000 per year. The useful life of the trademark still extends beyond the foreseeable horizon. The cash flows expected to be generated by the patent are P500,000 in 2022, P600,000 in 2023, P400,000 in 2024 and P500,000 in 2025. The appropriate discount rate for all intangible assets is 6%. The present value of 1 at 6% for one period is 0.94, for two periods is 0.89, for three periods is…
n January 1, 2020, Caleb Co acquired the following intangible assets: A trademark for 2,000,000. The trademark has 8 years remaining in its legal life. It is anticipated that the trademark will be renewed in the future, indefinitely, without a problem. A patent for 4,000,000. Because of market conditions, it is expected that the patent will have an economic life of just 5 years, although the remaining life is 10 years. On December 31, 2020, the intangible assets are assessed for impairment. Because of a decline in the economy, the trademark is expected to generate cash flows of just 120,000 per year. The useful life of the trademark still extends beyond the foreseeable horizon. The cashflows expected to be generated by the patent are 500,000 annually for each of the next 4 years. The appropriate discount rate for all intangible assets is 8%. The present value of an ordinary annuity of 1 at 8% for four periods is 3.31. What total amount should be recognized as impairment…