As the recently appointed auditor for Cheyenne Corporation, you have been asked to examine selected accounts before the 6-monthfinancial statements of June 30, 2020, are prepared. The controller for Cheyenne Corporation mentions that only one account is keptfor intangible assets. The account is shown below.Jan. 4Jan. 5Jan. 31Feb. 11March 31April 30June 30Intangible AssetsResearch and development costsLegal costs to obtain patentPayment of 7 months' rent on propertyleased by CheyennePremium on common stockUnamortized bond discount on bondsdue March 31, 2040Promotional expenses related tostart-up of businessOperating losses for first 6 monthsDebit934,00072,96086,80093,600228,800259,000Credit234,000Balance934,0001,006,9601,093,760859,760953,3601,182,1601,441,160Prepare the entries necessary to correct this account. Assume that the patent has a useful life of 10 years. (Credit account titles areautomatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles andenter o for the amounts.)

Journal Entry is the primary step in recording the transactions in the books of accounts.The…

Answered: As the recently appointed auditor for…

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 2, Bering Company disposes of a machine costing $47,800 with accumulated depreciation of $25,749. Prepare the entries to record the disposal under each separate situation. The machine is sold for $18,494 cash. The machine is traded in for a new machine having a $64,300 cash price. A $22,762 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance. The machine is traded in for a new machine having a $64,300 cash price. A $17,072 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance.
New lithographic equipment, acquired at a cost of $875,000 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $75,300. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for $128,100. Required: 1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods: a. Straight-line method Year DepreciationExpense Accumulated Depreciation,End of Year Book Value,End of Year 1 $ $ $ 2 $ $ $ 3 $ $ $ 4 $ $ $ 5 $ $ $ b. Double-declining-balance method Year DepreciationExpense Accumulated Depreciation,End of Year Book Value,End of Year 1 $ $ $ 2 $ $ $ 3 $ $ $ 4 $ $ $ 5 $ $ $ Feedback…
Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows: a. On December 31, the company determined that $3,400,000 of goodwill was impaired. b. Governmental and legal costs of $4,800,000 were incurred on September 30 in obtaining a patent with an estimated economic life of eight years. Amortization is to be for one-fourth of a year. c. Timber rights on a tract of land were purchased for $2,975,000 on February 4. The stand of timber is estimated at 12,500,000 board feet. During the current year, 4,150,000 board feet of timber were cut and sold. Required: 1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. Do not round your intermediate calculations. Item Impairment, Amortization or Depletion Expense а. b. C. 2. Journalize the adjusting entries to record the amortization, depletion, or impairment for each item. а. b. C.
New lithographic equipment, acquired at a cost of $656,250 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $56,400. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for $96,100. Required: 1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods: a. Straight-line method Year DepreciationExpense Accumulated Depreciation,End of Year Book Value,End of Year 1 $fill in the blank f3adbb01f07801f_1 $fill in the blank f3adbb01f07801f_2 $fill in the blank f3adbb01f07801f_3 2 $fill in the blank f3adbb01f07801f_4 $fill in the blank f3adbb01f07801f_5 $fill in the blank f3adbb01f07801f_6 3 $fill in the blank…
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Determining Carrying Value and Amortization of Intangible Assets Review the following information pertaining to Denzel Company. 1. A patent was purchased on January 2 of Year 1 for $104,000 when the remaining legal life was 16 years. On January 2 of Year 3, Denzel determined that the remaining useful life of the patent was only eight years from the date of its acquisition. 2. On January 1 of Year 3, Denzel Company purchased a second patent for $128,000 cash. At January 1 of Year 3, a total of 6 years of the patent's legal life of 20 years had expired. 3. On June 30 of Year 3, Denzel Company paid a firm $12,800 for a new trademark. Denzel considers the life of the trademark to be indefinite. 4. On November 1 of Year 3, Denzel Company acquired all noncash assets and assumed all liabilities of Lee Company at a cash purchase price of $192,000. Denzel determined that the fair value of the identifiable net assets acquired in the transaction is $187,200. Required a. What is the carrying value…
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Current Attempt in Progress Prepare the journal entries to record the following transactions for Blue Spruce Inc., which has a calendar year end and uses straight- line depreciation. (a) On June 30, 2022, the company sold office equipment for $21,500. The office equipment originally cost $34,000 and had accumulated depreciation to the date of disposal of $15,500. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date June 30, 2022 Sept 30, 2022 Save for Later Account Titles and Explanation Debit Attempts-0 of 1 used Credi
Current Attempt in Progress Carla Vista Co., organized in 2024, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2025 and 2026. 7/1/25 10/1/25 12/31/25 1/2/26 3/1/26 4/1/26 6/1/26 9/1/26 Intangible Assets 8-year franchise; expiration date 6/30/33 Advance payment on laboratory space (2-year lease) Net loss for 2025 including state incorporation fee, $3,000, and related legal fees of organizing, $7,000 (all fees incurred in 2025) Patent purchased (10-year life) Cost of developing a secret formula (indefinite life) Goodwill purchased (indefinite life) Legal fee for successful defense of patent purchased above Research and development costs $48,000 25,800 17,800 80,600 82,000 279,600 12,765 165,000 Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2026, recording any necessary…
Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows: a. On December 31, the company determined that $750,000 of goodwill was impaired. b. Governmental and legal costs of $1,920,000 were incurred on September 30 in obtaining a patent with an estimated economic life of 12 years. Amortization is to be for one-fourth of a year. c. Timber rights on a tract of land were purchased for $320,000 on February 4. The stand of timber is estimated at 2,000,000 board feet. During the current year, 500,000 board feet of timber were cut and sold. Required: 1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. Do not round your intermediate calculation. Item Impairment, Amortization or Depletion Expense a. b. C. 2. Journalize the adjusting entries to record the amortization, depletion, or impairment for each item. If an amount box does not…
Journal Entries for Plant Assets During the first few days of the year, Coastal Company entered into the following transactions: 1. Purchased a parcel of land with a building on it for $3,500,000 cash. The building, which will be used in operations, has an estimated useful life of 30 years and a salvage value of $200,000. The assessed valuations for property tax purposes show the land at $280,000 and the building at $2,520,000. 2. Paid $180,000 for the construction of an asphalt parking lot for customers. The parking lot is expected to last 15 years and has no salvage value. 3. Paid $500,000 for the construction of a new entrance to the building. 4. Purchased store equipment, paying the invoice price (including seven percent sales tax) of $89,660 in cash. The estimated useful life of the equipment is five years, and the salvage value is $4,000. 5. Paid $640 freight on the new equipment. 6. Paid $1,200 to repair damages to floor caused when the store equipment was accidentally dropped…

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