Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 6, Problem 6.5ME
Mini-Exercise 6.5
LO 9
Required:
How much goodwill will result from this transaction?
Expert Solution & Answer
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Exercise 8-21A (Algo) Computing and recording the amortization of intangibles LO 8-10, 8-11
Dynamo Manufacturing paid cash to acquire the assets of an existing company. Among the assets acquired were the following items.
Patent with 4 remaining years of legal life
Goodwill
$39,700
41,900
Dynamo's financial condition just prior to the acquisition of these assets is shown in the following statements model.
Balance Sheet
Income Statement
Assets
Stockholders'
Cash
+
85,200 +
Patent
NA
+
+
Goodwill
NA
=
NA
= Liabilities + Equity
85,200
+
Revenue
NA
-
-
=
Expenses = Net Income
NA
NA
Statement
of Cash
Flows
ΝΑ
Required
a. Compute the annual amortization expense for these items.
b. Show the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model.
c. Prepare the journal entries to record the acquisition of the intangible assets and the related amortization for year 1.
Complete this question by entering your answers in the tabs below.…
d
=
ces
Problem 6-22A (Algo) Accounting for acquisition of assets, including a basket purchase LO 6-1
Trinkle Company made several purchases of long-term assets during the year. The details of each purchase are presented here.
New Office Equipment
1. List price: $41,100; terms: 2/10, n/30; paid within the discount period.
2. Transportation-In: $740.
3. Installation: $470.
4. Cost to repair damage during unloading: $624.
5. Routine maintenance cost after eight months: $150.
Basket Purchase of Copler, Computer, and Scanner for $53,500 with Fair Market Values
1. Copier, $26,445.
2. Computer, $9,030.
3. Scanner, $29,025.
Land for New Warehouse with an Old Building Torn Down
1. Purchase price, $82,400.
2. Demolition of building, $5,410.
3. Lumber sold from old building, $2,210.
4. Grading in preparation for new building, $9,500.
5. Construction of new building, $217,000.
Required
In each of these cases, determine the amount of cost to be capitalized in the asset accounts.
Asset
Office…
LO 9
Assets
Cash + Patent +
94,000
ΝΑ
+
+
Exercise 8-20A Computing and recording the amortization of intangibles
Texas Manufacturing paid cash to purchase the assets of an existing company. Among the assets
purchased were the following items:
Goodwill
ΝΑ
Texas's financial condition just prior to the purchase of these assets is shown in the following
statements model:
=
Patent with 5 remaining years of legal life
Goodwill
Liab.
ΝΑ
Equity Rev.
+ 94,000
ΝΑ
Exp.
$36,000
40,000
ΝΑ
= Net Inc.
=
ΝΑ
Cash Flow
ΝΑ
Required
a. Compute the annual amortization expense for these items if applicable.
b. Record the purchase of the intangible assets and the related amortization expense for year 1
in a horizontal statements model like the preceding one.
c. Prepare the journal entries to record the purchase of the intangible assets and the related
amortization for year 1.
Chapter 6 Solutions
Accounting: What the Numbers Mean
Ch. 6 - Prob. 6.1MECh. 6 - Prob. 6.2MECh. 6 - Mini-Exercise 6.3 LO 3 Depreciation calculation...Ch. 6 - Prob. 6.4MECh. 6 - Mini-Exercise 6.5 LO 9 Goodwill Backstreets Co....Ch. 6 - Prob. 6.6MECh. 6 - Exercise 6.7 LO 1 Basket purchase allocation...Ch. 6 - Prob. 6.8ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10E
Ch. 6 - Exercise 6.11 LO 3 Effect of depreciation on ROI...Ch. 6 - Exercise 6.12 LO 3 Financial statement effects of...Ch. 6 - Exercise 6.13 LO 3 Depreciation calculation...Ch. 6 - Exercise 6.14 LO 3 Depreciation calculation...Ch. 6 - Prob. 6.15ECh. 6 - Prob. 6.16ECh. 6 - Prob. 6.17ECh. 6 - Exercise 6.18 LO 9 Goodwill-effect on ROI and...Ch. 6 - Exercise 6.19 LO 6, 8, 9 Transaction...Ch. 6 - Exercise 6.20 LO 3, 4, 6, 8 Transaction...Ch. 6 - Prob. 6.21PCh. 6 - Prob. 6.22PCh. 6 - Prob. 6.23PCh. 6 - Problem 6.24 LO 3 Partial-year depreciation...Ch. 6 - Problem 6.25
LO 3
Identify depreciation methods...Ch. 6 - Prob. 6.26PCh. 6 - Prob. 6.27PCh. 6 - Prob. 6.28PCh. 6 - Prob. 6.29PCh. 6 - Prob. 6.30PCh. 6 - Prob. 6.31PCh. 6 - Prob. 6.32PCh. 6 - Prob. 6.33CCh. 6 - Prob. 6.34CCh. 6 - Case 6.35 LO 3, 6 Capstone analytical review of...
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