1. How much of the transactions below should be charged against CELESTINE's Net Income for the year ended 2020? 2. Compute for the amount presented as noncash Assets in the balance sheet on December 31, 2020 using the transactions below.
1. How much of the transactions below should be charged against CELESTINE's Net Income for the year ended 2020? 2. Compute for the amount presented as noncash Assets in the balance sheet on December 31, 2020 using the transactions below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. How much of the transactions below should be charged against CELESTINE's Net Income for the year ended 2020?
2. Compute for the amount presented as noncash Assets in the balance sheet on December 31, 2020 using the transactions below.
Transcribed Image Text:CELESTINE CORPORATION was organized on 2019. Its accounting records include only one
account for all intangible assets. The following is a summary of the debit entries that have been
recorded and posted during 2019 and 2020:
INTANGIBLE ASSETS
July 1, 2019 8-year franchise; expires June 30, 2027
126,000
Advance payment on leasehold (term of lease is 2 years)
December 31, 2019 Net loss 2019 including incorporation fee, P3,000 and related
legal fees of organizing. P15, 000 (all fees incurred in 2019)
Acquired patent A (25-year life determined by company)
October 1, 2019
84,000
48,000
January 2, 2020
222,000
March 1, 2020
Cost of developing secret formula
Goodwill purchased
May 1, 2020 Goodwill arising from business combination
May 1, 2020 Acquired copyright from the business combination with book
225,000
April 1, 2020
835,200
850,000
200,000
value (amortized for 20 years and expiring in October 2020)
June 1, 2020 Registered Patent B at the patenting office
July 1, 2020 Legal fee for successful defense of patent purchased above
September 1, 2020 Legal fees for merger and acquisition documents related to the
150,000
37,950
business combination
Research and development costs
November 30, 2020 Purchased Patent C with useful life of 5 years
50,000
480,000
October 1, 2020
120,000
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