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
On January 1, 2019, TharnCorporation leased a machinery from TypeCompany on a five-year lease term at P150,000 annual rental payments, paid in advance. There is a bargain purchase option on December 31, 2023 of P240,000. The economic life of the equipment is 15 years. The interest rate implicit in the lease is 12%. How much is the depreciation expense to be recognized in 2019 related to the right-of-use asset? A.P39,451 B.P49,451 C.P118,354 D.P148,354 Which of the following is part of the entry or entries to be recorded at the end of lease term assuming that Tharnfails to exercise its bargain purchase option? A. Debit Loss on Unexercised Bargain Purchase Option, P245,516 B.Debit Lease Liability, P325,236 C.Debit Interest Payable, P25,736 D.Credit Right-of-Use Asset, P741,771
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
Magnitude Ltd acquired an item of plant under a three-year lease on January 1, 2019. The remaining useful life of the plant is seven years and there are no transfer of the asset and no purchase option at the end of the lease. The rental payments are $10,000,000 per annum payable in arrears for the three years on December 31 each year and the company incurs initial direct costs of $20,000 and receives lease incentives of $16,000. The interest rate implicit in the lease is 8% per annum. Required: a. Prepare the relevant journal entries in the first year of the lease. b. Prepare the relevant financial statement extracts in the first year of the lease
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
5. Answer what is required of the problem.

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