**Patent Amortization and Financial Reporting Guide**The Randolph Company acquired a patent on June 1, 2016, at a cost of $1,188,000. Although the patent's legal life is twelve years, its useful economic life is considered to be only nine years. This guide explores key questions regarding the amortization and financial implications of this patent.**A. Amortization Expense for 2016 & 2017:**To calculate the annual amortization expense, the cost of the patent is divided by its useful economic life:\[ \text{Annual Amortization} = \frac{\$1,188,000}{9} = \$132,000 \]For 2016, the amortization period covers seven months (June to December):\[ \text{2016 Amortization} = \frac{7}{12} \times \$132,000 = \$77,000 \]For 2017, a full year of amortization is recognized:\[ \text{2017 Amortization} = \$132,000 \]**B. Balance Sheet Presentation on 9/30/2019:**The patent is presented on the balance sheet at its net book value, calculated as the initial cost minus accumulated amortization to date. As a note, accumulated amortization is not typically listed separately for intangible assets.**C. Estimated Value of the Patent on 3/31/2017:**As of March 31, 2017, the net book value of the patent is:\[\text{Net Book Value} = \$1,188,000 - (\text{Amortization for 10 months})\]\[ = \$1,188,000 - \left( \frac{10}{12} \times \$132,000 \right) = \$1,078,000 \]**D. Calculation of Gain or Loss if Patent is Sold on 8/31/21 for $300,000:**At the time of sale, the accumulated amortization must first be computed, followed by determining the book value and thus understanding gain or loss:1. **Calculate Accumulated Amortization:** By 8/31/2021, \[ \text{Total Amortization} = 5 \, \text{years of full amortization + 4 months} \] \[ = (5 \times \$

Amortization: A systematic reduction in the value of an intangible asset throughout the life of…

The Randolph Company purchased a patent on June 1, 2016 for $1,188,000 with twelve years remaining on the patent's legal life. useful economic life of only nine years. It is estimated, however, that this patent will have a Questions: A. Amortization Expense For 2016 & 2017: 2016 2017 B. Balance Sheet Presentation on 9/30/2019: Note: Generally, no accumulated amortization account is generally used for intangibles, and thus they are presented on a single line at net book value. c. How much can be received for the patent on 3/31/17? D. Gain or loss before taxes if patent sold on 8/31/21 for $300,000? Where will this item be reported on the income statement? Dollar Amount Gain or Loss? Location on lncome Statement

The Randolph Company purchased a patent on June 1, 2016 for $1,188,000 with twelve years remaining on the patent's legal life. useful economic life of only nine years. It is estimated, however, that this patent will have a Questions: A. Amortization Expense For 2016 & 2017: 2016 2017 B. Balance Sheet Presentation on 9/30/2019: Note: Generally, no accumulated amortization account is generally used for intangibles, and thus they are presented on a single line at net book value. c. How much can be received for the patent on 3/31/17? D. Gain or loss before taxes if patent sold on 8/31/21 for $300,000? Where will this item be reported on the income statement? Dollar Amount Gain or Loss? Location on lncome Statement

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Do not give answer in image
On January 1, 2020, due to the unexpected advances in technology, Claro Co. realized that its machinery has been impaired. The unit was purchased on January 1, 2016 for P20,000,000. The entity initially estimated that the asset has a useful life of 20 years with no residual value. On that date, the fair value of the asset was P10,000,000. The cash inflows and outflows to be derived from the asset from its continuing use are as follows: End of year Cash inflow Cash outflow 2020 7,500,000 3,500,000 2021 6,000,000 3,000,000 2022 4,000,000 2,000,000 2023 3,000,000 1,500,000 2024 2,500,000 1,000,000 Should the entity decide to continue to use the asset, remaining life will be 5 years. The discount rate used by the entity is 10%. How much is the impairment loss to be recognized on January 1, 2020?
ABC Corporation bought an equipment with a total cost of P4,000,000 on Jan. 1, 2016. It was depreciated using the straight-line method over 20 years with a salvage value of P400,000. On Jan. 1, 2020, there is a foreseen decrease in the useful life of the equipment to only 8 remaining years. Hence, the asset is being tested for impairment. The current fair value less cost to sell is P600,000 while the salvage value at the end of the useful life is P400,000. Annual net operating cash flows is foreseen to be at P200,000 per year. The effective interest rate to be used for impairment testing is 6%. How much is the impairment loss?
Blossom Enterprises purchased equipment on January 1, 2020, at a cost of €405,000. Blossom uses the straight-line depreciation method, a 5-year estimated useful life, and no residual value. At the end of 2020, independent appraisers determined that the assets have a fair value of €330,000. . Prepare the journal entry to record 2020 depreciation using the straight-line method. Account Titles and Explanation Debit Credit Depreciation Expense Accumulated Depreciation-Equipment (To record depreciation expense) please help me fill the table
On march 10, 2023, Sweet Acacia limited sold equipment that it bought for 286800 on August 20, 2026. It was originally estimated that the equipment would have a useful life of 12 years and a residual value of 24000 at the end of that time and depreciation has been calculated on that basis. The company uses the straight line method of depreciation and prepares its financial statement under IFRS. Calculate the depreciation charges on this equipment for 2016 and 2023, and the total charge for the period from 2017 to 2022, inclusive under each of the following six assumptions for partial periods. Depreciation is calculated for the exact period of time during which the asset is owned. Depreciation is calculated for the full year on January 1 balance in the asset account. Depreciation is calculated for the full year on December 31 balance in the asset account Depreciation for a half year is charged on plant assets that are acquired or disposed of during the year. Depreciation is…
Bennet Company purchased a patent from Arnold Company on January 1, 2021 for $450,000. Arnold Company had used the patent for five years prior to selling it to Bennet Company. Assuming Bennet Company plans to use the patent for its full useful life, what amount of amortization expense would Bennet Company record on its 2021 income statement? O $30,000 O $25,000 O $22,500 $37,500 O There is not enough information to answer the question.
how much is the revaluation deficit/impairment loss to be recognized on the income statement as of dec. 31, 2023
The answer is P28,125. The 1st bullet’s computation of amortization is only needed. The 2nd and 3rd bullet does not need to be amortized. Help me compute for the 1st bullet's amortization.
R Company registered a patent on January 1, 2015. P Company purchased the patent from R Company for $450,000 on January 1, 2020, and began to amortize the patent over its remaining legal life. In early 2021, P Company determined that the patent's economic benefits would last only until the end of 2025. What amount should P Company record for patent amortization in 2021? $30,000 $70,000 $90,000 $84,000
SHOW YOUR SOLUTION IN GOOD ACCOUNTING FORM. THANK YOU What amount should be recorded as depreciation for 2021? A. 180000 B. 220000 C. 250000 D. 275000
The company also recently has bought an intangible assets for $60000 with as estimated useful life of 60000 units. No residual value is anticipated. Around 15000 units were produced by the end of the year 2019. Identify amount of amortization of such assets for the year 2019. a. $15000 b. $60000 c. $45000 d. $30000
I have a doubt in the last entry amount