Binson Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,515,000 on January 1, 2018. Binson estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of $1,285,000 when Lou sold it to Binson. During 2019, a franchise was purchased from Rink Company for $440,000. In addition, 5% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $1,500,000. Binson estimates the useful life of the franchise to be 10 years and takes a full year's amortization in the year of purchase. Binson incurred R&D costs in 2019 as follows: Materials and equipment $104,000 Personnel 155,000 Indirect costs 73,000 $332,000 Binson estimates that these costs will be recouped by December 31, 2020. On January 1, 2019, Binson estimates, based on new events, that the remaining life of the patent purchased on January 1, 2018, is only 10 years from January 1, 2019. Required: 1. Prepare a schedule showing the intangibles section of Binson's balance sheet at December 31, 2019. Binson Company Intangible Assets Section of Balance Sheet December 31, 2019 Patent, net (Schedule 1) $fill in the blank Franchise from Rink Company, net (Schedule 2) fill in the blank Intangible assets $fill in the blank (total) Schedule 1: Computation of Patent from Lou Company Cost of patent at date of purchase $fill in the blank Amortization of patent for 2018 fill in the blank $fill in the blank (subtotal) Amortization of patent for 2019 fill in the blank Patent balance $fill in the blank (total) Schedule 2: Computation of Franchise from Rink Company Cost of franchise at date of purchase $fill in the blank Amortization of franchise for 2019 fill in the blank Franchise balance $fill in the blank (total)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

Binson Company has provided information on intangible assets as follows:

A patent was purchased from Lou Company for $1,515,000 on January 1, 2018. Binson estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of $1,285,000 when Lou sold it to Binson.
During 2019, a franchise was purchased from Rink Company for $440,000. In addition, 5% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $1,500,000. Binson estimates the useful life of the franchise to be 10 years and takes a full year's amortization in the year of purchase.
Binson incurred R&D costs in 2019 as follows:

Materials and equipment $104,000

Personnel 155,000

Indirect costs 73,000

$332,000

Binson estimates that these costs will be recouped by December 31, 2020.
On January 1, 2019, Binson estimates, based on new events, that the remaining life of the patent purchased on January 1, 2018, is only 10 years from January 1, 2019.

Required:

1. Prepare a schedule showing the intangibles section of Binson's balance sheet at December 31, 2019.

Binson Company

Intangible Assets Section of Balance Sheet

December 31, 2019

Patent, net (Schedule 1)	$fill in the blank
Franchise from Rink Company, net (Schedule 2)	fill in the blank
Intangible assets	$fill in the blank (total)

Schedule 1: Computation of Patent from Lou Company

Cost of patent at date of purchase	$fill in the blank
Amortization of patent for 2018	fill in the blank
	$fill in the blank (subtotal)
Amortization of patent for 2019	fill in the blank
Patent balance	$fill in the blank (total)

Schedule 2: Computation of Franchise from Rink Company

Cost of franchise at date of purchase	$fill in the blank
Amortization of franchise for 2019	fill in the blank
Franchise balance	$fill in the blank (total)

2. Prepare a schedule showing the income statement effects for the year ended December 31, 2019, as a result of the previously mentioned facts.

Binson Company

Income Statement Effects

For the Year Ended December 31, 2019

Patent from Lou Company:
(fill in the blank)		(amount)
Franchise from Rink Company:
(fill in the blank)	(amount)
(fill in the blank)	(amount)	(subtotal)
(Fill in the blank)		-(amount)
Total expenses		$fill in the blank (total)

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Materials and equipment	$104,000
Personnel	155,000
Indirect costs	73,000
	$332,000