Bear Web Securities acquired a patent on January 1, 2022 for $68,000. The patent is expected to be ofbenefit to Bear for 6 years. After using the patent for two year it was determined that an advancement by acompetitor would make the patent worthless in 3 years.Required:1. Record the acquisition of the patent.2. Record the patents amortization for 2022, 2023, and 2024.

The objective of the question is to record the acquisition of the patent and its amortization for…

Answered: Bear Web Securities acquired a patent…

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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American Food Services, Incorporated, acquired a packaging machine from Barton and Barton Corporation. • Barton and Barton completed construction of the machine on January 1, 2024. • In payment for the $4 million machine, American Food Services issued a four-year installment note to be paid in four equal payments at the end of each year. • The payments include interest at the rate of 10%. Required: 1. Prepare the journal entry for American Food Services' purchase of the machine on January 1, 2024. 2. Prepare an amortization schedule for the four-year term of the installment note. 3. Prepare the journal entry for the first installment payment on December 31, 2024. 4. Prepare the journal entry for the third installment payment on December 31, 2026.
Taylor Swift Corporation purchases a patent from Salmon Company on January 1, 2017, for $54,000. The patent has a remaining legal life of 16 years. Taylor Swift feels the patent will be useful for 10 years. Prepare Taylor Swift’s journal entries to record the purchase of the patent and 2017 amortization.
Sandiago Co leased the equipment to Dedi Inc, on April 1, 2016. The lease, properly accounted for as a sale by Sandiago, has a period of 8 years ending March 31, 2024. The first of 8 equal annual payments is Rp 17,500,000 per year (excluding implementation costs) was carried out on April 1, 2016. The cost of equipment for Sandiago was Rp. 94,000,000. The equipment has an estimated useful life of 8 years with no salvage value, Sandiago uses straight-line depreciation and depreciates a full year in the year of purchase. The cash selling price of this equipment is IDR 102,690,000. Required: (1) Prepare the journal entries needed to record the lease on Sandiago's books (2) How much interest income will Sandiago recognize in 20167
Braun Company acquired a piece of equipment from Tipper Company under a lease. The lease requires five annual lease payments of $30,000 with the first payment due when the lease begins, on January 1, 2022. Future lease payments are due on January 1 of each year of the lease term. The interest rate in the lease is 6%. What amount should Braun Company debit the equipment account on the date of acquisition?
At the beginning of 2021, VHF Industries acquired a machine with a fair value of $6,074,700 by issuing a fouryear, noninterest-bearing note in the face amount of $8 million. The note is payable in four annual installments of $2 million at the end of each year.Required:1. What is the effective rate of interest implicit in the agreement?2. Prepare the journal entry to record the purchase of the machine.3. Prepare the journal entry to record the first installment payment at December 31, 2021. 4. Prepare the journal entry to record the second installment payment at December 31, 2022.5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similar risk was 11%. Prepare the journal entry to record the purchase of the machine.
Elie Company purchased a building with a market value of $275,000 and land with a market value of $50,000 on January 1, 2024. Elie Company paid $25,000 cash and signed a 20-year, 6% mortgage payable for the balance. Requirements 1. 2. Journalize the January 1, 2024, purchase. Journalize the first monthly payment of $2,149 on January 31, 2024. (Round to the nearest dollar.) Requirement 1. Journalize the January 1, 2024, purchase. (Record debits first, then credits. Select explanations on the last line of the journal entry.) Date Accounts and Explanations 2024 Jan. 1 Debit O Credit
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.
On January 1, 2020, Hand acquires 40% ownership of Foot. At the acquisition date, Foot had equipment with a book value of $100,000 and a fair value of $160,000. The remaining useful life is 4 years. What is the amount of amortization (debit to equity earnings) that will be recognized in 2020?
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
Baillie Power leased hightech electronic equipment from Courtney Leasing on January 1, 2024. Courtney purchased the equipment from Doane Machines at a cost of $258,500, its fair value. 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) Related Information: Lease term 2 years (8 quarterly periods) Quarterly lease payments $23,500 on January 1, 2024, and on March 31, June 30, September 30, and December 31 thereafter Economic life of asset 5 years Interest rate charged by the lessor 8% Required: Prepare a lease amortization schedule and appropriate entries for Baillie Power from the beginning of the lease through December 31, 2024. December 31 is the fiscal year end for each company. Appropriate adjusting entries are recorded at the end of each quarter.
Culver Products Ltd. purchased a patent on January 1, 2020, for $840,000. At the time of the purchase, the patent had a remaining legal life of 15 years. In January, 2023, Culver spent $372,000 successfully defending the patent in court. One of the other results of the court case was the discovery that the patent would only have a remaining useful life of 9 years. Culver's year-end was December 31. Prepare the entries on the books of Culver Ltd. to record (a) the purchase of the patent, (b) amortization for the first year (2020), (c) the defense of the patent, and (d) amortization for 2023. (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. Round answers to O decimal places, e.g. 5,275. List all debit entries before credit entries.) No. Account Titles and Explanation (a) (b) (c) (d) Debit Credit
Presented below is selected information for Sandhill Company. Answer the questions asked about each of the factual situations. (Do not leave any answer field blank. Enter O for amounts.) (a) On January 1, 2017, Sandhill incurred organization costs of $265,000. What amount of organization expense should be reported in 2017? Amount to be reported $ (b) Sandhill bought a franchise from Carla Vista Co. on January 1, 2016, for $190,000. The carrying amount of the franchise on Carla Vista's books on January 1, 2016, was $238,00O. The franchise agreement had an estimated useful life of 10 years. Because Sandhill must enter a competitive bidding at the end of 2018, it is unlikely that the franchise will be retained beyond 2025. What amount should be amortized for the year ended December 31, 2017? Amount to be amortized $ %24

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