(17). Tahir Industries has the following patents on its December 31, 2021, balance sheet. Patent Item Initial Cost Date Acquired Useful Life at Date Acquired $ 48,000 $ 19,200 $ 16,800 Patent A 3/1/18 20 years Patent B 7/1/19 10 years Patent C 9/1/20 8 years The following events occurred during the year ended December 31, 2022. (1). Research and development costs of $347,000 were incurred during the year. (2). Patent D was purchased on July 1 for $10,800. This patent has a useful life of 12 years. (3). As a result of reduced demands fo certain products protected by Patent B, a possible im airment of Patent B's value may have occurred at Decem ber 31, 2022. The controller for Tahir estimates the future cash flows from Patent B will be as follows. Year Expected Future Cash Flows 2023 $2,500 2024 2,500 2025 2,500 The discount rate to be used for these cash flows proper is 8%. (Assume that the cash flows occur at the end of the year.) (Annuity Factor @ 8% for 3 yrs = $2.57710) Instructions (a). Compute the total carrying amount of Tahir's patents on its December 31, 2021, balance sheet. (b). Compute the total carrying amount of Tahir's patents on its December 31, 2022, balance sheet.
(17). Tahir Industries has the following patents on its December 31, 2021, balance sheet. Patent Item Initial Cost Date Acquired Useful Life at Date Acquired $ 48,000 $ 19,200 $ 16,800 Patent A 3/1/18 20 years Patent B 7/1/19 10 years Patent C 9/1/20 8 years The following events occurred during the year ended December 31, 2022. (1). Research and development costs of $347,000 were incurred during the year. (2). Patent D was purchased on July 1 for $10,800. This patent has a useful life of 12 years. (3). As a result of reduced demands fo certain products protected by Patent B, a possible im airment of Patent B's value may have occurred at Decem ber 31, 2022. The controller for Tahir estimates the future cash flows from Patent B will be as follows. Year Expected Future Cash Flows 2023 $2,500 2024 2,500 2025 2,500 The discount rate to be used for these cash flows proper is 8%. (Assume that the cash flows occur at the end of the year.) (Annuity Factor @ 8% for 3 yrs = $2.57710) Instructions (a). Compute the total carrying amount of Tahir's patents on its December 31, 2021, balance sheet. (b). Compute the total carrying amount of Tahir's patents on its December 31, 2022, balance sheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:(17). Tahir Industries has the following patents on its December
31, 2021, balance sheet.
Patent Item Initial Cost Date Acquired Useful Life at Date Acquired
Patent A
$ 48,000
3/1/18
20 years
$ 19,200
$ 16,800
Patent B
7/1/19
10 years
Patent C
9/1/20
8 years
The following events occurred during the year ended December
31, 2022.
(1). Research and development costs of $347,000 were
incurred during the year.
(2). Patent D was purchased on July 1 for $10,800. This patent
has a useful life of 12 years.
(3). As a result of reduced demands fo certain products
protected by Patent B, a possible im airment of Patent
B's value may have occurred at Decem ber 31, 2022. The
controller for Tahir estimates the future cash flows from
Patent B will be as follows.
Year Expected Future Cash Flows
2023
$2,500
2024
2,500
2025
2,500
The prop
discount rate to be used for these cash flows
is 8%. (Assume that the cash flows occur at the end of the
year.) (Annuity Factor @ 8% for 3 yrs = $2.57710)
Instructions
(a). Compute the total carrying amount of Tahir's patents on
its December 31, 2021, balance sheet.
(h). Compute the total carrying amount of Tahir's patents on
its December 31, 2022, balance sheet.
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