Danube, Toggle, and ConnectOn rely on various intangible assets to operate their businesses. These companies amortize the cost of these assets using the straight-line method over the following average estimated useful lives (in years), as reported in their annual reports. Type of Intangible Asset Developed Technology Trade Names Customer Relationships Danube Toggle 3.5 7.0 2.2 4.5 2.1 6.2 ConnectOn 2.5. 1.1 3.0 Assume each company spent $805,000 at the beginning of the current year for additional Developed Technology. Because of its proprietary nature, the technology is estimated to have no residual value at the end of its estimated life. Required: Calculate the impact (direction and amount) that the amortization of such expenditures would have on each company's Income from Operations in the current year. (Decreases should be indicated by a minus sign. Do not round intermediate calculations.) Company Danube Toggle ConnectOn Effect on Income from Operations

Danube, Toggle, and ConnectOn rely on various intangible assets to operate their businesses. These companies amortize the cost of these assets using the straight-line method over the following average estimated useful lives (in years), as reported in their annual reports. Type of Intangible Asset Developed Technology Trade Names Customer Relationships Danube Toggle 3.5 7.0 2.2 4.5 2.1 6.2 ConnectOn 2.5. 1.1 3.0 Assume each company spent $805,000 at the beginning of the current year for additional Developed Technology. Because of its proprietary nature, the technology is estimated to have no residual value at the end of its estimated life. Required: Calculate the impact (direction and amount) that the amortization of such expenditures would have on each company's Income from Operations in the current year. (Decreases should be indicated by a minus sign. Do not round intermediate calculations.) Company Danube Toggle ConnectOn Effect on Income from Operations

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 1.3AIC: Estimate the average total estimated useful life of depreciable property, plant, and equipment....

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Danube, Toggle, and ConnectOn rely on various intangible assets to operate their businesses. These companies amortize the cost of these assets using the straight-line method over the following average estimated useful lives (in years), as reported in their 2015 annual reports. Type of Intangible Asset Danube Toggle ConnectOn Developed Technology 3.5 10.0 2.5 Trade Names 2.3 4.6 1.2 Customer Relationships 2.1 6.2 3.1 Assume each company spent $840,000 at the beginning of the current year for additional Developed Technology. Because of its proprietary nature, the technology is estimated to have no residual value at the end of its estimated life. Required: Calculate the impact (direction and amount) that the amortization of such expenditures would have on each company’s Income from Operations in the current year.
Estimate the average total estimated useful life of depreciable property, plant, and equipment. Starbucks reports 580.6 million of depreciation and amortization in the statement of cash flows, of which 4.5 million relates to amortization of limited-life intangible assets. Does the estimate reconcile with stated accounting policy on useful lives for property, plant, and equipment? Explain.
Assume REH AG, a hypothetical company, incurs expenditures of €1,000 per monthduring the fiscal year ended 31 December 2009 to develop software for internal use.Under IFRS, the company must treat the expenditures as an expense until the softwaremeets the criteria for recognition as an intangible asset, after which time the expenditurescan be capitalized as an intangible asset.1. What is the accounting impact of the company being able to demonstrate that thesoftware met the criteria for recognition as an intangible asset on 1 February versus1 December?2. How would the treatment of expenditures diff er if the company reported under U.S.GAAP and it had established in 2008 that the project was likely to be completed?
E9-13 (Algo) Calculating the Impact of Estimated Useful Lives of Intangible Assets [LO 9-6] Danube, Toggle, and ConnectOn rely on various intangible assets to operate their businesses. These companies amortize the cost of these assets using the straight-line method over the following average estimated useful lives (in years), as reported in their annual reports. es Type of Intangible Asset Developed Technology Customer Relationships Trade Names Danube Toggle ConnectOn 4.0 8.0 2.5 2.5 4.8 2.3 6.4 1.4 3.3 Assume each company spent $820,000 at the beginning of the current year for additional Developed Technology. Because of its proprietary nature, the technology is estimated to have no residual value at the end of its estimated life. Required: Calculate the impact (direction and amount) that the amortization of such expenditures would have on each company's Income from Operations in the current year. (Decreases should be indicated by a minus sign. Do not round intermediate calculations.)…
Which of the following formulas for the capital expenditure on intangibles is correct? Assume the current time (now) is t1 and last year is to, and that 'Intangible assets' is a carrying value net of accumulated amortisation. Select one: a. CapExOnIntangibles(t1) = IntangibleAssets (t1) + IntangibleAssets (t0) + Amortisation ExpenseOnIntanglibles (t1) b. CapExOnIntangibles(t1) = IntangibleAssets (t1) - IntangibleAssets(t0) + Amortisation ExpenseOnIntanglibles(t1) c. CapExOnIntangibles (t1) = IntangibleAssets(t1) - IntangibleAssets(t0) - Amortisation ExpenseOnIntanglibles (t1) d. CapExOnIntangibles(t1) = IntangibleAssets (t1) + AmortisationExpenseOnIntanglibles (t1) e. CapExOnIntangibles (t1) = IntangibleAssets (t1) - Amortisation ExpenseOnIntanglibles (t1)
ABC Corporation is a company that specializes in (1) research and development of new medications and (2) acquisition of patents for new medications. ABC follows IFRS accounting standards. In ABC's situation, which of the following statements about the treatment of intangible assets is correct? Intangible assets with indefinite lives must be amortized annually. Intangible assets must be measured using the cost model Research and development costs are expensed as incurred, except for software development. O Intangible assets may be revalued to fair value if there is an active market for the asset
The balance sheet of Alpha Ltd on 31/12/21 is the following ASSETS Plot of land Building Depreciation Vehicle Depreciation. Furniture Depreciation Participations Total fixed assets. Goods Goods in pledge Customers Downpayment to suppliers Prepaid expenses Available Funds Circulating Assets Total assets 31/12/2021 40.000 200.000 -40.000 80.000 -75.000 95.000 -72.000 85.000 313.000 60.000 20.000 30.000 20.000 20.000 107.000 257.000 570.000 31/12/2022 Liabilities Equity (stock price 3€) Statutory Reserves Premium Reserve New result Total Foreign Capitals Long term Loan Bills payable Suppliers Loan with pledged goods Customers' downpayments Expenses payables Prepaid revenues Total Predictions Total liabilities 31/12/2021 180.000 60.000 20.000 -30.000 230.000 120.000 40.000 50.000 14.000 20.000 30.000 20.000 294.000 46.000 570.000 During the use of 2022, the following transactions took place. Sale of goods with value EUR 80,000 and cost EUR 35,000, 80% of them paid by cash and the rest with…
Inspector Gadget Ltd has a policy of writing off development expenditure to the Income Statement as was incurred. In preparing its financial statements for the year 20X7 it became aware that under IFRS rules qualifying expenditure should be treated as an intangible asset. Below is the qualifying expenditure for the company: Year ended 30 Sep 20X4 Year ended 30 Sep 20X5 Year ended 30 Sep 20X6 Year ended 30 Sep 20X7 $'000 300 240 800 400 All capitalized expenditure is deemed to having a four year life. Assume that amortization starts at the beginning of the accounting period following capitalization. Inspector Gadget Ltd has no development expenditure before that for the year ended 30 September 20X4. Required: b. Treating the above as the correction of an error in applying an accounting policy, calculate the amounts that should appear in the income statement and statement of financial position (including comparative figures) and statement of changes in equity of the company inb respect…
DLW Corporation acquired and placed in service the following assets during the year: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Asset Date Acquired Cost Basis Computer 2/19 $ 16,300 equipment Furniture 4/27 22,900 Commercial building 10/2 319,000 Assuming DLW does not elect §179 expensing or bonus depreciation, answer the following questions: a. What is DLW's year 1 cost recovery for each asset? (Round your answers to the nearest dollar amount.) b. What is DLW's year 3 cost recovery for each asset if DLW sells all of these assets on 1/15 of year 3?(Round your answers to the nearest dollar amount.)
Tremendous Company is involved in the exploration for mineral resource. The accounting policy i to recognize and measure exploration asset initially at cost. During the current year, the entity incurred the following expenditures: Exploratory drilling for materials on site and related activities Roads and infrastructure to access exploratory site Expenditure relating to the subsequent development of the resources P 3,000,000 5,250,000 5,100,000 Ql. At what amount should exploration asset be initially recognized in the statement of financial position?
(Classification Issues—Intangibles) The following is a list of items that could be included in the intangible assets section of the balance sheet.1. Investment in a subsidiary company.2. Timberland.3. Cost of engineering activity required to advance the design of a product to the manufacturing stage.4. Lease prepayment (6 months’ rent paid in advance).5. Cost of equipment obtained.6. Cost of searching for applications of new research findings.7. Costs incurred in the formation of a corporation.8. Operating losses incurred in the start-up of a business.9. Training costs incurred in start-up of new operation.10. Purchase cost of a franchise.11. Goodwill generated internally.12. Cost of testing in search for product alternatives.13. Goodwill acquired in the purchase of a business.14. Cost of developing a patent.15. Cost of purchasing a patent from an inventor.16. Legal costs incurred in securing a patent.17. Unrecovered costs of a successful legal suit to protect the patent.18. Cost of…
Jeremiah Corporation has provided the following information on intangible assets as follows:a. A patent was purchased from Isaiah Company for P5,000,000 on January 1, 20x1. On the acquisitiondate, the patent was estimated to have a useful life of 10 years. The patent had a net book value ofP5,000,000 when Isaiah sold it to Jeremiah.b. On February 2, 20x2, a franchise was purchased from Daniel Company for P2,160,000. The contractthat runs for 20 years provides that 5%of revenue from the franchise must be paid to Daniel. Revenuefrom the franchise for 20x2 was P8,000,000.c. Jeremiah incurred the following research and development costs in 20x2:Materials and equipment P462,000Personnel 657,000Indirect costs 329,000Total P1,448,000Because of the recent events, Jeremiah, on January 1, 20x2, estimates that the remaining useful life of thepatent purchased on January 1, 20x1, is only five (5) years from January 1, 20x2.1. On December 31, 20x2, the carrying value of the patent should be…