Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 41BE
Part 1. (a)
To determine
Write the journal entries to record the purchase of the patent.
b.
To determine
Write the journal entries to record the amortization for Year 1.
Part 2.
To determine
Write the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
(Learning Objectives 5, 6: Record intangibles, amortization, and impairment)1. Milton Printers incurred external costs of $700,000 for a patent for a new laser printer.Although the patent gives legal protection for 20 years, it was expected to provide Miltonwith a competitive advantage for only eight years due to expected technological advancesin the industry. Milton uses the straight-line method of amortization.2. After using the patent for four years, Milton learned at an industry trade show thatAnderson Printers has patented a more efficient printer and will begin selling the newprinter next quarter. Because of this new information, Milton determined that the expectedfuture cash flows from its patent were now only $270,000. The fair value of Milton’spatent on the open market was now zero.Requirements1. Write the journal entries to record (a) the purchase of the patent and (b) amortization for year 1.2. Once Milton learned of the competing printer and adjusted the expected future…
Maylen Printers (MP) manufactures printers. Assume that MP recently paid $800,000 for a patent on a new laser printer. Although it gives legal protection for 20 years, the patent is
expected to provide a competitive advantage for only ten years.
Read the fequirements
Requirement 1. Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for the first full year. (Record
debits first, then credits. Select the explanation on the last line of the journal entry table.)
(a) Record the purchase of the patent.
Date
Accounts and Explanation
Debit
Credit
(O Time
Course Chat
O GB V 19:10
DELL
a. A patent purchased this year from Miller Co. on January 1 for a cash cost of $1,600. When purchased, the patent had an estimated
life of 8 years.
b. A trademark was registered with the federal government for $10,000. Management estimated that the trademark could be worth as
much as $240,000 because it has an indefinite life.
c. Computer licensing rights were purchased this year on January 1 for $42,000. The rights are expected to have a six-year useful life
to the company.
Required:
1. Compute the acquisition cost of each intangible asset.
2. Compute the amortization of each intangible for the current year ended December 31.
3. Show how these assets and any related expenses should be reported on the balance sheet and income statement for the current
year.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Req 3A
Req 3B
Compute the amortization of each intangible for the current year ended December 31. (Do not round intermediate
calculations.)
Amortization…
Chapter 8 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - What is depreciation, and why is it used in...Ch. 8 - Prob. 5DQCh. 8 - Which depreciation method would be moot...Ch. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Prob. 9DQCh. 8 - Prob. 10DQ
Ch. 8 - Prob. 1SCCh. 8 - Prob. 2SCCh. 8 - How should a capital expenditure for a long-term...Ch. 8 - Which depreciation method usually produces the...Ch. 8 - Prob. 5SCCh. 8 - Prob. 6SCCh. 8 - Prob. 7SCCh. 8 - Prob. 8SCCh. 8 - Prob. 9SCCh. 8 - Prob. 10SCCh. 8 - Prob. 11SCCh. 8 - Prob. 12SCCh. 8 - Prob. 1SECh. 8 - Long-term asset terms (Learning Objective 1) 5-10...Ch. 8 - Prob. 3SECh. 8 - Lump-sum purchase (Learning Objective 2) 5-10 min....Ch. 8 - Errors in accounting for long-term assets...Ch. 8 - Concept of depreciation (Learning Objective 3)...Ch. 8 - Depreciation methods (Learning Objective 3) 10-15...Ch. 8 - Depreciation methods (Learning Objective 3) 10-15...Ch. 8 - Prob. 9SECh. 8 - Prob. 10SECh. 8 - Prob. 11SECh. 8 - Prob. 12SECh. 8 - Prob. 13SECh. 8 - Prob. 14SECh. 8 - Prob. 15SECh. 8 - Other long term assets (Learning Objective 8) 5-10...Ch. 8 - Prob. 17SECh. 8 - Prob. 18AECh. 8 - Prob. 19AECh. 8 - Prob. 20AECh. 8 - Prob. 21AECh. 8 - Depreciation methods (Learning Objective 3) 15-20...Ch. 8 - Prob. 23AECh. 8 - Prob. 24AECh. 8 - Prob. 25AECh. 8 - Prob. 26AECh. 8 - Prob. 27AECh. 8 - Prob. 28AECh. 8 - Prob. 29AECh. 8 - Prob. 30AECh. 8 - Prob. 31AECh. 8 - Prob. 32BECh. 8 - Prob. 33BECh. 8 - Prob. 34BECh. 8 - Prob. 35BECh. 8 - Prob. 36BECh. 8 - Prob. 37BECh. 8 - Prob. 38BECh. 8 - Prob. 39BECh. 8 - Prob. 40BECh. 8 - Prob. 41BECh. 8 - Prob. 42BECh. 8 - Prob. 43BECh. 8 - Prob. 44BECh. 8 - Prob. 45BECh. 8 - Long-term asset costs and partial-year...Ch. 8 - Journalizing long-term asset transactions...Ch. 8 - Prob. 48APCh. 8 - Prob. 49APCh. 8 - Prob. 50APCh. 8 - Prob. 51APCh. 8 - Prob. 52APCh. 8 - Prob. 53BPCh. 8 - Journalizing long-term asset transactions...Ch. 8 - Prob. 55BPCh. 8 - Prob. 56BPCh. 8 - Prob. 57BPCh. 8 - Prob. 58BPCh. 8 - Prob. 59BPCh. 8 - Prob. 1CECh. 8 - Prob. 1CPCh. 8 - Continuing Financial Statement Analysis Problem...Ch. 8 - Prob. 1EIACh. 8 - Prob. 2EIACh. 8 - Financial Analysis Purpose: To help familiarize...Ch. 8 - Prob. 1IACh. 8 - Prob. 1SBACh. 8 - Written Communication A client of yours notified...
Knowledge Booster
Similar questions
- (Learning Objective 3: Change a plant asset’s useful life) Fresno Consultantspurchased a building for $440,000 and depreciated it on a straight-line basis over 40 years. Theestimated residual value was $82,000. After using the building for 20 years, Fresno realized thatthe building would remain useful only 14 more years. Starting with the 21st year, Fresno begandepreciating the building over a revised total life of 34 years and decreased the residual value to$14,600. Record depreciation expense on the building for years 20 and 21.arrow_forwardComputing Subsequent Carrying Amount of Patents In January of Year 1, Ford Co. purchased a patent from a research institution for $250,000. The patent was estimated to have a useful life of 15 years. In December of Year 2, Ford Co. unsuccessfully defended the patent in legal proceedings. The fair value of the patent on December 31 of Year 2, is now estimated to be $50,000 with a 2-year useful life. a. Record the entry for the legal fees of $20,000, paid in cash. b. Record any adjusting entry required on December 31 of Year 2. c. Determine the carrying value of the patent on December 31 of Year 2. • Note: Round your final answers to the nearest dollar. Date a. Dec. 31, Year 2 b. Dec. 31, Year 2 C. Account Name To record legal fees. To record adjusting entry. Patent net carrying value, Dec. 31, Year 2 $ 0 > > Dr. 0 0 0 0 Cr. 0 O O Oarrow_forwardE7-33A. (Learning Objectives 5, 6: Record intangibles, amortization, and impairment)Sweitzer Printers incurred external costs of $400,000 for a patent for a new laser printer.Although the patent gives legal protection for 20 years, it was expected to provide Sweitzerwith a competitive advantage for only ten years due to expected technological advances in theindustry. Sweitzer uses the straight-line method of amortization.After using the patent for five years, Sweitzer learned at an industry trade show that KaytownPrinters has patented a more efficient printer and will be selling this printer next quarter. Becauseof this new information, Sweitzer determined that the expected future cash flows from its patentwere now only $130,000. The fair value of Sweitzer’s patent on the open market was now zero.Requirements1. Write the journal entries to record (a) the purchase of the patent and (b) amortization for year 1.2. Once Sweitzer learned of the competing printer and adjusted the expected…arrow_forward
- Windsor Industries has the following patents on its December 31, 2019, balance sheet. Patent Item Patent A Patent B Patent C 2. 3. Year — Initial Cost Date Acquired $52,800 $21,600 $16,800 The following events occurred during the year ended December 31, 2020. 2021 1. Research and development costs of $327,900 were incurred during the year. Patent D was purchased on July 1 for $10,800. 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, 2020. The controller for Windsor estimates the future cash flows from Patent B will be as follows. 2022 3/1/16 Future Cash Flows 7/1/17 $2,500 $2,500 9/1/18 Useful Life at Date Acquired 20 years 10 years 8 yearsarrow_forwardMay I ask for help with this question? I got an answer of 28,750 (Rounded Up) Please check. In 20x1, G Co. started to develop a patent. Total costs incurred during the year amounting to P400,000. On January 1, 20x2, the patent was fully developed. Legal and registration cost incurred in registering the patent amounted to P300,000. It was estimated that the patent has a useful life of 25 years. In 20x4, G Co. started to develop a new improved patent to extend the life of the old patent. Development costs totaled P800,000. On January 1, 20x5, the new patent was completed and legal and registration costs incurred to register the new patent amounted to P320,000. It was estimated that the new patent will extend the life of the old patent by another 20 years starting January 1, 20x5. How much is the amortisation expense in 20x5?arrow_forwardCOLLEGE Question 4: The following details regarding Machines are provided: Machine Date of purchase Cost Date of sale Cash Proceeds $ 1,000,000 02/06/2020 450,000 XX Y 05/04/2017 01/01/2019 2,000,000 The policy of the company is to depreciate its PP&E at 10% on cost. Depreciation is charged in full in the year of purchase disposal. Required: For year ended 31st December 2020 prepare: Machinery account Accumulated depreciation account Machinery disposal a/c SPOL Extract SFP Extract Question 5: A machine was purchased on 2nd July 2016 for $1,200,000. It was traded in for new one whose price was $1,000,000 on 2nd June exchange. The policy of the company is to charge depreciation for its PP&E at 10% on cost per annum Depreciation is charged in depreciation is charged in the year of disposal.arrow_forward
- In 20x1, G Co. started to develop a patent. Total costs incurred during the year amounting to P400,000. On January 1, 20x2, the patent was fully developed. Legal and registration cost incurred in registering the patent amounted to P300,000. It was estimated that the patent has a useful life of 25 years.In 20x4, G Co. started to develop a new improved patent to extend the life of the old patent. Development costs totaled P800,000. How much is the carrying amount of the patent on December 31, 20x4? Your answer In 20x1, G Co. started to develop a patent. Total costs incurred during the year amounting to P400,000. On January 1, 20x2, the patent was fully developed. Legal and registration cost incurred in registering the patent amounted to P300,000. It was estimated that the patent has a useful life of 25 years. How much is the carrying amount of the patent on December 31, 20x2? Your answerarrow_forwardHandling acquisition of patent, amortization, and change in useful life Melbourn Printers (MP) manufactures printers. Assume that MP recently paid $200,000 for a patent on a new laser printer. Although it gives legal protection for 20 years, the patent is expected to provide a competitive advantage for only eight years. Requirements Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for the first full year. After using the patent for four years, MP learns at an industry trade show that another company is designing a more efficient printer. On the basis of this new information, UP decides, starting with Year 5, to amortize the remaining cost of the patent over two remaining years, giving the patent a total useful life of six years. Record amortization for Year 5.arrow_forwardMay I ask for help with this question? I got an answer of 285,000 (Rounded Up) Please check. In 20x1, G Co. started to develop a patent. Total costs incurred during the year amounting to P400,000. On January 1, 20x2, the patent was fully developed. Legal and registration cost incurred in registering the patent amounted to P300,000. It was estimated that the patent has a useful life of 25 years. How much is the carrying amount of the patent on December 31, 20x2?arrow_forward
- (Learning Objective 5: Record natural resource assets and depletion) MineralMines paid $425,000 for the right to extract ore from a 250,000-ton mineral deposit. In additionto the purchase price, Mineral Mines paid a $110 filing fee to the country recorder, a $2,000license fee to the state of Colorado, and $55,390 for a geologic survey. Because the companypurchased the rights to the minerals only, it expects this mineral rights asset to have a residualvalue of zero when it is fully depleted. During the first year of production, Mineral Minesremoved 35,000 tons of ore, of which it sold 29,000 tons. Make journal entries to record (a)purchase of the mineral rights, (b) payment of fees and other costs, (c) depletion for first-yearproduction, and (d) cost of the ore sold. Round depletion per unit to the closest centarrow_forwardCalico Inc. purchased a patent on a new drug it created. The patent cost $12,000. The patent has a life of twenty years, but Calico expects to be able to sell the drug for fifty years. Calculate the amortization expense and record the journal for the first years expense.arrow_forwardof Take me to the text Higgins Ski Resort spent several years developing a new snow-making machine. Its lawyer suggested patenting the machine. The company obtained the patent on January 1, 2021. The company paid $190,000 to the lawyer, $15,000 to the government for the patent and $10,000 in additional fees. Required a) Prepare the journal entry to record the full cost of the patent. Do not enter dollar signs or commas in the input boxes. Date Account Title and Explanation Jan 1 Debit Credit To record the total relevant patent fees b) The patent has an estimated life of 20 years. Prepare the journal entry to record amortization for one year on December 31, 2021. Round your answers to the nearest whole number. Date Account Title and Explanation Dec 31 Check To record amortization for the year Debit Creditarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College