1. Pharoah purchased a patent from Vania Co. for $2,700,000 on January 1, 2018. The patent is being amortized over its remaininglegal life of 10 years, expiring on January 1, 2028. During 2020, Pharoah determined that the economic benefits of the patent wouldnot last longer than 7 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net ofaccumulated amortization, at December 31, 2020?The amount to be reported2$2. Pharoah bought a franchise from Alexander Co. on January 1, 2019, for $979,000. The carrying amount of the franchise onAlexander's books on January 1, 2019, was $635,000. The franchise agreement had an estimated useful life of 20 years. BecausePharoah must enter a competitive bidding at the end of 2028, it is unlikely that the franchise will be retained beyond 2028. Whatamount should be amortized for the year ended December 31, 2020?The amount to be amortized3. On January 1, 2020, Pharoah incurred organization costs of $455,000. What amount of organization expense should be reportedin 2020?The amount to be reported2$4. Pharoah purchased the license for distribution of a popular consumer product on January 1, 2020, for $363,000. It is expectedthat this product will generate cash flows for an indefinite period of time. The license has an initial term of 5 years but by paying anominal fee, Pharoah can renew the license indefinitely for successive 5-year terms. What amount should be amortized for the yearended December 31, 2020?The amount to be amortized$

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1. Pharoah purchased a patent from Vania Co. for $2,700,000 on January 1, 2018. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2028. During 2020, Pharoah determined that the economic benefits of the patent would not last longer than 7 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, 2020? The amount to be reported $

1. Pharoah purchased a patent from Vania Co. for $2,700,000 on January 1, 2018. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2028. During 2020, Pharoah determined that the economic benefits of the patent would not last longer than 7 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, 2020? The amount to be reported $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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…
How much is the correct total amortization expense for 2020?
On January 31, 2020, Manning Company acquired a new machine by paying $40,000 cash and agreeing to pay $20,000 annually for four years, beginning on January 31, 2021. Assuming an interest rate of 10%, Manning should record the acquisition cost of the machine on January 31, 2020, at a.$120,000. b.$109,737. c.$103,397. d.$102,092
2. Tartabull bought a franchise from Alexander Co. on January 1, 2019, for $900,000. The carrying amount of the franchise on Alexander's books on January 1, 2019, was $600,000. The franchise agreement had an estimated useful life of 20 years. Because Tartabull must enter a competitive bidding at the end of 2028, it is unlikely that the franchise will be retained beyond 2028. What amount should be amortized for the year ended December 31, 2020? The amount to be amortized SA $ 701250
Indigo Corporation purchases a patent from Sandhill Company on January 1, 2020, for $54,000. The patent has a remaining legal life of 12 years. Indigo feels the patent will be useful for 10 years. Prepare Indigo’s journal entries to record the purchase of the patent and 2020 amortization.
1.
Ayayai Corporation purchases a patent from Blossom Company on January 1, 2025, for $63,000. The patent has a remaining legal life of 14 years. Ayayai estimates the patent will have a useful life of 10 years, based on expected product innovations in the market. Prepare Ayayai's journal entries to record the purchase of the patent and 2025 amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.) Account Titles and Explanation (To record purchase of patents) (To record amortization of patents) Debit Credit
5. Answer what is required of the problem.
The Western Company, a company that follows IFRS, provided you with the following information about a number of transactions that took place in 2020: 1) On January 1, 2020 Western acquired a patent for $45,000 cash. The patent expires on January 1, 2028, but the company determined that it will generate future benefits for 6 years from the date of acquisition. During 2022, the total useful life of the patent was revised to 4 years. 2) During March 2020, The Wester Company invested $120,000 in research costs about a new product that it aims to develop in 2021. The amount was paid in cash. 3) The Western Company estimates that its internal goodwill is worth $980,000 in July 2020. Required- a) Prepare the journal entries related to the patent from January 1, 2020 to December 31, 2022. b) Prepare the journal entries for 2 and 3. If no journal entry is required, justify why.
52
In January 2021, Blossom Corporation purchased a patent for a new consumer product for $558900. At the time of purchase, the patent was valid for fifteen years. Due to the competitive nature of the product, however, the patent was estimated to have a useful life of only ten years. In 2026 the product was determined to be obsolete due to a competitor's new product. What amount should Blossom report on the income statement during 2026 related to the patent, assuming straight-line amortization is recorded at the company's December 31 year-end? $35890 O $279450 O $578900 O $179450
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