The following information relates to the intangible assets of Lettuce Express:a. On January 1, 2021, Lettuce Express completed the purchase of Farmers Produce, Inc., for $1,500,000 in cash. Thefair value of the identifiable net assets of Farmers Produce was $1,350,000.b. Included in the assets purchased from Farmers Produce was a patent for a method of processing lettuce valued at$45,000. The original legal life of the patent was 20 years. There are still 17 years left on the patent, but LettuceExpress estimates the patent will be useful for only 10 more years.c. Lettuce Express acquired a franchise on July 1, 2021, by paying an initial franchise fee of $175,000. The contractuallife of the franchise is seven years.Problem 7-6B Part 22. Prepare the intangible asset section of the December 31, 2021, balance sheet.LETTUCE EXPRESSBalance SheetDecember 31, 2021(Intangible Assets Section)Intangible AssetsFranchisesPatentsGoodwillTotal Intangible Assets24

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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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The intangible assets section of Novak Corporation's balance sheet at December 31, 2025, is presented here. Patents ($78,000 cost less $7,800 amortization) Copyrights ($46,800 cost less $32,760 amortization) Total $70,200 14,040 $84,240 The patent was acquired in January 2025 and has a useful life of 10 years. The copyright was acquired in January 2019 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2026. Jan. 2 Jan.-June Sept. 1 Oct. 1 Paid $60,840 legal costs to successfully defend the patent against infringement by another company. Developed a new product, incurring $299,000 in research and development costs. A patent was granted for the product on July 1, and its useful life is equal to its legal life. Legal and other costs for the patent were $26,400. Paid $52,000 to a quarterback to appear in commercials advertising the company's products. The commercials will air in September and October. Acquired a copyright for…
Conrad Inc. purchased a patent for $1,000,000 for a specialty line of patented switch plate covers and outlet plate covers specifically designed to light up automatically when the power fails. Assume the switch plate patent was purchased January 1, 2020, and it is being depreciated over a period of ten years. Assume that Conrad Inc. does not use an accumulated amortization account but instead charges amortization directly against the intangible asset account. Required: 1. This part of the question is not part of your Connect assignment. 2. Prepare the journal entries to record the purchase and amortization of the switch plate patent in 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 Record the purchase of patent. Note: Enter debits before credits. Event a General Journal Debit Credit View general journal Record entry Clear entry
At the beginning of 2022, Metatec Incorporated acquired Ellison Technology Corporation for $650 million. In addition to cash, receivables, and inventory, the following assets and their fair values were also acquired: Plant and equipment (depreciable assets) Patent Goodwill $ 155 million 45 million 120 million The plant and equipment are depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The patent is estimated to have a five-year useful life, no residual value, and is amortized using the straight-line method. At the end of 2024, a change in business climate indicated to management that the assets of Ellison might be impaired. The following amounts have been determined: Plant and equipment: Undiscounted sum of future cash flows Fair value Patent: Undiscounted sum of future cash flows Fair value Goodwill: Fair value of Ellison Technology Corporation Book value of Ellison's net assets (excluding goodwill) Book value of Ellison's net…
. The following information pertains to Best Food (BF) Company’s intangible assets: a. On January 1, 2020, BF signed an agreement to operate as a franchisee of Macky’s Food Chain for an initial franchise fee of P1,500,000. Of this amount, P300,000 was paid when the agreement was signed and the balance is payable in 4 annual payments of P300,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020 of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is P874,000. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. BF’s revenue from the franchise for 2020was P19 million. BF estimates the useful life of the franchise to be 10 years. b. BF incurred P1,300,000 of experimental and developmental costs in its laboratory to develop a patent which was granted on January 2,…
Brea plc, which has a financial year end of 31 December, has an item of plant which meets the criteria to be classified as held for sale at 1 July 20X9. The original cost of the asset was $120,000 with an estimated useful life of 10 years and, at 1 January 20X9, had accumulated depreciation of $36,000. At 1 July 20X9 the fair value of the plant is $50,000 with costs to sell estimated at $4,000. a) Show how this asset would be accounted for in the 20X9 financial statements. b) Suppose that the plant is still held for sale at 31 December 20X9, and, at this date, the fair value and estimated costs to sell are respectively: (i) $45,000 and $4,000. (ii) $55,000 and $5,000 For(i) and (ii) show how the changes in fair value less costs to sell would be accounted for in the books of accounts
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At the beginning of 2022, Metatec Incorporated acquired Ellison Technology Corporation for $590 million. In addition to cash, receivables, and inventory, the following assets and their fair values were also acquired: Plant and equipment (depreciable assets) $ 149 million Patent 39 million Goodwill 120 million The plant and equipment are depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The patent is estimated to have a five-year useful life, no residual value, and is amortized using the straight-line method. At the end of 2024, a change in business climate indicated to management that the assets of Ellison might be impaired. The following amounts have been determined: Plant and equipment: Undiscounted sum of future cash flows $ 79 million Fair value 59 million Patent: Undiscounted sum of future cash flows $ 20 million Fair value 13 million Goodwill: Fair value of Ellison Technology Corporation $…
FDN Company acquires a building on April 1, 2021 at a cost of P52,500,000. The building has an estimated useful life of 40 years and an estimated salvage value of P500,000. How much is the depreciation expense for the year ended December 31, 2021?
On January 1, 2021, Smith Company sold a piece of machinery to Gaby Company for P1,900,000. Because of the entity's commitments to its customers to provide their needs for the next three years, Smith Company simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows: Fair value of machinery - P2,200,000 Carrying amount of machinery - P1, 700,000 Remaining useful life of the machinery - 8 years Lease term - 3 years Annual rent payable at the end of each year beginning, December 31, 2021- P500,000 Market rate of interest - 10% The present value of an ordinary annuity of 1 at 10% for 3 periods is 2.4869 The present value of an annuity due of 1 at 10% for 3 periods is 2.7355 1. How much is the interest expense for 2021 on the lease liability relating to the right retained in the sale-leaseback transaction? (round off your final answer to the nearest peso value)…
Sami company acquired a patent on October 1, 2020. Sami paid cash of $55,000 to the seller. registration fees of $5,000 were paid related to the acquisition. On the same date, Sami paid $5,000 advertising expense. The patent has a useful life of 10 years. What is the amount of patent to be reported at the statement of financial position on 31/12/2021? a- 55000 b- 60000 c- 50000 d- 52500
At the beginning of 2022, Metatec Incorporated acquired Ellison Technology Corporation for $590 million. In addition to cash, receivables, and inventory, the following assets and their fair values were also acquired: Plant and equipment (depreciable assets) Patent Goodwill The plant and equipment are depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The patent is estimated to have a five-year useful life, no residual value, and is amortized using the straight-line method. At the end of 2024, a change in business climate indicated to management that the assets of Ellison might be impaired. The following amounts have been determined: Plant and equipment: Undiscounted sum of future cash flows Fair value Patent: Undiscounted sum of future cash flows Fair value Goodwill: Fair value of Ellison Technology Corporation Book value of Ellison's net assets (excluding goodwill) Book value of Ellison's net assets (including goodwill) Required 1 $…
Comprehensive Information concerning Valnet Corporation's intangible assets is as follows: a. On January 1, 2019, Valnet signed an agreement to operate as a franchisee of Rapid Copy Service Inc. for an initial franchise fee of $94,000. Of this amount, $26,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $17,000 each beginning January 1, 2020. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 2, 2019, of the 4 annual payments discounted at 15% (the implicit rate for a loan of this type) is $48,500. The agreement also provides that 4% of the revenue from the franchise must be paid to the franchisor annually. Valnet's revenue from the franchise for 2019 was $920,000. Valnet estimates the useful life of the franchise to be 5 years. b. Valnet incurred $63,000 of experimental and development costs in its laboratory to develop a patent, which was…

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