1. Pharoah purchased a patent from Vania Co. for $2,700,000 on January 1, 2018. The patent is being amortized over its remaininglegal life of 10 years, expiring on January 1, 2028. During 2020, Pharoah determined that the economic benefits of the patent wouldnot last longer than 7 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net ofaccumulated amortization, at December 31, 2020?The amount to be reported2$2. Pharoah bought a franchise from Alexander Co. on January 1, 2019, for $979,000. The carrying amount of the franchise onAlexander's books on January 1, 2019, was $635,000. The franchise agreement had an estimated useful life of 20 years. BecausePharoah must enter a competitive bidding at the end of 2028, it is unlikely that the franchise will be retained beyond 2028. Whatamount should be amortized for the year ended December 31, 2020?The amount to be amortized3. On January 1, 2020, Pharoah incurred organization costs of $455,000. What amount of organization expense should be reportedin 2020?The amount to be reported2$4. Pharoah purchased the license for distribution of a popular consumer product on January 1, 2020, for $363,000. It is expectedthat this product will generate cash flows for an indefinite period of time. The license has an initial term of 5 years but by paying anominal fee, Pharoah can renew the license indefinitely for successive 5-year terms. What amount should be amortized for the yearended December 31, 2020?The amount to be amortized$

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1. Pharoah purchased a patent from Vania Co. for $2,700,000 on January 1, 2018. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2028. During 2020, Pharoah determined that the economic benefits of the patent would not last longer than 7 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2020? The amount to be reported $

1. Pharoah purchased a patent from Vania Co. for $2,700,000 on January 1, 2018. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2028. During 2020, Pharoah determined that the economic benefits of the patent would not last longer than 7 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2020? The amount to be reported $

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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On January 31, 2020, Manning Company acquired a new machine by paying $40,000 cash and agreeing to pay $20,000 annually for four years, beginning on January 31, 2021. Assuming an interest rate of 10%, Manning should record the acquisition cost of the machine on January 31, 2020, at a.$120,000. b.$109,737. c.$103,397. d.$102,092
2. Tartabull bought a franchise from Alexander Co. on January 1, 2019, for $900,000. The carrying amount of the franchise on Alexander's books on January 1, 2019, was $600,000. The franchise agreement had an estimated useful life of 20 years. Because Tartabull must enter a competitive bidding at the end of 2028, it is unlikely that the franchise will be retained beyond 2028. What amount should be amortized for the year ended December 31, 2020? The amount to be amortized SA $ 701250
Indigo Corporation purchases a patent from Sandhill Company on January 1, 2020, for $54,000. The patent has a remaining legal life of 12 years. Indigo feels the patent will be useful for 10 years. Prepare Indigo’s journal entries to record the purchase of the patent and 2020 amortization.
Ayayai Corporation purchases a patent from Blossom Company on January 1, 2025, for $63,000. The patent has a remaining legal life of 14 years. Ayayai estimates the patent will have a useful life of 10 years, based on expected product innovations in the market. Prepare Ayayai's journal entries to record the purchase of the patent and 2025 amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.) Account Titles and Explanation (To record purchase of patents) (To record amortization of patents) Debit Credit
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FIFA Footballs acquired a patent in 2021 at a cost of $150 million and amortizes the patent on a straight-line basis. During 2024 management decided that the benefits from the patent would be received over a total period of 8 years rather than the 20-year legal life being used to amortize the cost. FIFA's 2024 financial statements should include: Multiple Choice a patent balance of $150 million. a patent balance of $102 million. patent amortization expense of $15 million. patent amortization expense of $7.5 million.
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On January 1, 2024, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Nevels. The equipment cost Nevels $779,677 and has an expected economic life of five years. Nevels expects the residual value on December 31, 2027, will be $103,000. Negotiations led to the lessee guaranteeing a $146,000 residual value. Equal payments under the lease are $203,000 and are due on December 31 of each year with the first payment being made on December 31, 2024. Nguyen is aware that Nevels used a 8% interest rate when calculating lease payments. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Prepare the appropriate entries for both Nguyen and Nevels on January 1, 2024, to record the lease. Prepare all appropriate entries for both Nguyen and Nevels on December 31, 2024, related to the lease.
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