The following information relates to Question 2 and 3: On July 1, 2018, Gene Parmesan's Genes Company paid $16.500,000 cash and signed a $7,500,000 note payable (due in 3 months) to acquire in-process R&D from another company. They are planning to use the assets acquired for research and development in their GMB (Genetically Modified Broccolil) division. The assets can be used for other research and development projects as well. They plan to use the assets purchased for 10 years and believe they can sell them for $1,500.000 at the end of those 10 years. From July 1 through Dec. 31, 2018, Genes Co. spends $6,000,000 (pald in cash) on scientist salaries and broccoll plants to use in the purchased R&D project. Genes Co. also amortizes any capitalized assets on a straight-line basis. REQUIRED: Write the journal entry related to the acquisition that Genes Co. should record on July 1.2018.
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- [The following information applies to the questions displayed below.] Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device. Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent Total During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. Exercise 7-7 (Algo) Part 1 $ 3,600,000 1,120,000. 560,000 360,000 76,000 36,000 $ 5,752,000 Required: 1. How much should Satellite Systems capitalize in the Patent account in the balance sheet? Patent costs capitalizedOn July 16, 1998, Wyatt Corp. purchased 40 acres of land for $350,000. The land has been held for a future plant site until the current date, December 31, 2016. On December 18, 2016, TexoPete Inc. purchased 40 acres of land for $2,000,000 to be used for a distribution center. The TexoPete land is located next to the Wyatt Corp. land. Thus, both Wyatt Corp. and TexoPete Inc. own nearly identical pieces of land.1. What are the valuations of land on the balance sheets of Wyatt Corp. and TexoPete Inc. using generally accepted accounting principles?2. How might fair value accounting aid comparability when evaluating these two companies?In 2021, Space Technology Company modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Acquisition of equipment Testing and modification of the prototype Legal and other fees for patent application on the new communication system Legal fees for successful defense of the new patent Total The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $17,000. During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above as costs of the patent. Management contends that the device simply represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. Required: Prepare correcting entries that reflect the appropriate treatment of the expenditures. (If no entry is…
- Eastern Mindanao. Because the mine is located deep in the Problem 28-6 (IAA) In 2017, Sunflower Company acquired a silver minė in Eastern Mindanao. Because the mine is located deep in the Mindanao frontier, Sunflower Company was able to acquire the mine for the low price of P50,000. In 2018, Sunflower Company constructed a road to the silver mine costing P5,000,000. Improvements and other development costs made in 2018 cost P750,000. Because of the improvements to the mine and to the surrounding land, it is estimated that the mine can be sold for P600,000 when mining activities are complete. During 2019, five buildings were constrücted near the mine site to house the mine workers and their families. The total cost of the five buildings was P2,000,000. Estimated residual value is P200,000. In 2020, geologists estimated that 4,000,000 tons of silver ore could be removed from the mine for refining. During 2020, the first year of operations, only 500,000 tons of silver ore were removed…Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, and development costs totaled $7.5 million. Extraction activities began on July 1, 2024. After the copper is extracted in approximately six years, Schefter is obligated to restore the land to its original condition, including constructing a park. The company's controller has provided the following three cash flow possibilities for the restoration costs: 1. 2. 3. Cash Flow $ 630,000 730,000 830,000 Probability 30% 30% 40% The company's credit-adjusted, risk-free rate of interest is 4%, and its fiscal year ends on December 31. Note: Use appropriate factor(s) from the tables provided. Round other intermediate calculations to the nearest whole dollar. Enter your answers in whole dollars. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. What is the initial cost of the copper mine? 2. How much accretion expense will Schefter report in its 2024 income statement? 3. What is the book…Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, and development costs totaled $7.5 million. Extraction activities began on July 1, 2024. After the copper is extracted in approximately six years, Schefter is obligated to restore the land to its original condition, including constructing a park. The company's controller has provided the following three cash flow possibilities for the restoration costs: 1. 2. 3. Cash Flow $ 630,000 730,000 830,000 Probability 38% 30% 40% The company's credit-adjusted, risk-free rate of interest is 4%, and its fiscal year ends on December 31. Note: Use appropriate factor(s) from the tables provided. Round other intermediate calculations to the nearest whole dollar. Enter your answers in whole dollars. (FV of $1, PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. What is the initial cost of the copper mine? 2. How much accretion expense will Schefter report in its 2024 income statement? 3. What is the book…
- In 2016, the Marion Company purchased land containing a mineral mine for $1,600,000. Additional costs of $600,000 were incurred to develop the mine. Geologists estimated that 400,000 tons of ore would be extracted. After the ore is removed, the land will have a resale value of $100,000. To aid in the extraction, Marion built various structures and small storage buildings on the site at a cost of $150,000. These structures have a useful life of 10 years. The structures cannot be moved after the ore has been removed and will be left at the site. In addition, new equipment costing $80,000 was purchased and installed at the site. Marion does not plan to move the equipment to another site, but estimates that it can be sold at auction for $4,000 after the mining project is completed. In 2016, 50,000 tons of ore were extracted and sold. In 2017, the estimate of total tons of ore in the mine was revised from 400,000 to 487,500. During 2017, 80,000 tons were extracted. Required: 1. Compute…In 2016, the Marion Company purchased land containing a mineral mine for $1,600,000. Additional costs of $600,000 were incurred to develop the mine. Geologists estimated that 400,000 tons of ore would be extracted. After the ore is removed, the land will have a resale value of $100,000. To aid in the extraction, Marion built various structures and small storage buildings on the site at a cost of $150,000. These structures have a useful life of 10 years. The structures cannot be moved after the ore has been removed and will be left at the site. In addition, new equipment costing $80,000 was purchased and installed at the site. Marion does not plan to move the equipment to another site, but estimates that it can be sold at auction for $4,000 after the mining project is completed. In 2016, 50,000 tons of ore were extracted and sold. In 2017, the estimate of total tons of ore in the mine was revised from 400,000 to 487,500. During 2017, 80,000 tons were extracted, of which 60,000 tons were…Consider each of the transactions below independently. All of the expenditures were made in cash. 1. During 2020, PC Software Inc. developed a new personal computer database management software package. Total expenditures on the project were $300,000, of which 30% occurred before the technological feasibility of the product had been established. 2. Xon Corporation paid $50,000 to complete overhaul of the plumbing system (old costs unknown). 3. The Johnson Company disposed of an old machine with an original cost of $8,000 and a book value of $4,000 and received $3,000. Required: Prepare journal entries to record each of the above transactions. Note: You may create a table as follows to organize your journal entries. Date Account titles Debit Credit 1 Cash 10,000 Sales Revenue 10,000 Edit Format Table Paragraph v в I U A 12pt v
- Sweets Inc. made several capital purchases during the last month of the year. As part of the purchases the company sold some existing fixed assets. Yesterday, as you were walking to the compnay cafeteria, you saw the President of Sweets Inc. While walking the President you mentioned the recent capital purchases would significantly impact the financial statments. Today, the President called you directly and asked you to write a memorandum explaining the impact of the capital purchases (and related sales of some existing fixed assets) on each of the following financial statments; Income Statement, Balance Sheet, Statement of Cash Flows. Summary of December Capital Transactions On Dec 1, 2021 Sweets Inc purchased a new delivert truck for $100,000 The following additional information was provided: The truck was paid for with cash. The truck is expected to have a service life of 10 years. No salvage value is expected after the service life. The company uses straight line depreciation for…Camilia Inc. has options to acquire intangible assets either through buying the intangible asset, or through A. doing some research and develop the intangible asset internally. From what you learnt from this course explain with details the differences between these two ways of acquiring intangible assets. Camilia, Inc, a biotechnology company, developed and patented a diagnostic product called Trouvadol. Camilia purchased some research equipment to be used for Trouvadol and subsequent research projects. Camilia defeated a legal challenge to its Trouvadol patent, and began production and marketing operations for the project. Corporate headquarters B. costs were allocated to Camilia's research division as a percentage of the division's salaries. Required: 1. How the equipment purchased for Trouvadol should be reported in Camilia's income statement and statement of financial position? Explain your answer. 2. Describe the accounting treatment of research and development costs. And what is…Klingon Widgets, Incorporated, purchased new cloaking machinery three years ago for $6 million. The machinery can be sold to the Romulans today for $5.4 million. Klingon's current balance sheet shows net fixed assets of $3.5 million, current liabilities of $945,000, and net working capital of $275,000. If the current assets and current liabilities were liquidated today, the company would receive a total of $1.25 million cash. a. What is the book value of Klingon's total assets today? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) b. What is the sum of the market value of NWC and the market value of fixed assets? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) a. Book value of total assets b. Sum of market value NWC and market value of fixed assets