FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Kingbird Industries has the following patents on its December 31, 2024, balance sheet:
Useful Life at Date Acquired
20 years
10 years
8 years
Patent Item Initial Cost
1
2
Patent A
Patent B
3.
Patent C
$48,000
$19,200
$16,800
Date Acquired
3/1/21
The following events occurred during the year ended December 31, 2025.
7/1/22
9/1/23
Research and development costs of $361,400 were incurred during the year.
Patent D was purchased on July 1 for $11.520. This patent has a useful life of 12 years.
As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent B's value may
have occurred at December 31, 2025. The controller for Kingbird estimates the future cash flows from Patent B will be as
follows:
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Transcribed Image Text:Kingbird Industries has the following patents on its December 31, 2024, balance sheet: Useful Life at Date Acquired 20 years 10 years 8 years Patent Item Initial Cost 1 2 Patent A Patent B 3. Patent C $48,000 $19,200 $16,800 Date Acquired 3/1/21 The following events occurred during the year ended December 31, 2025. 7/1/22 9/1/23 Research and development costs of $361,400 were incurred during the year. Patent D was purchased on July 1 for $11.520. This patent has a useful life of 12 years. As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent B's value may have occurred at December 31, 2025. The controller for Kingbird estimates the future cash flows from Patent B will be as follows:
Year Future Cash Flows
2026
$2,800
2027
$2,800
$2.000
2028
The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year)
Click here to view factor tables
(a)
Compute the total carrying amount of Kingbird's patents on its December 31, 2024 balance sheet.
Total carrying amount
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Transcribed Image Text:Year Future Cash Flows 2026 $2,800 2027 $2,800 $2.000 2028 The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year) Click here to view factor tables (a) Compute the total carrying amount of Kingbird's patents on its December 31, 2024 balance sheet. Total carrying amount
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