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Cheyenne Industries has the following patents on its December 31, 2024, balance sheet. Patent Item Date Acquired Useful life at Date Acquired Patent A Patent B Patent C Year 2026 2027 Initial Cost 2028 $44,268 $17,040 $22,560 3/1/21 7/1/22 9/1/23 The following events occurred during the year ended December 31, 2025. Research and Development costs of $247,000 were incurred during the year Patent D was purchased on July 1 for $37,848. The patent has a useful life of 9 ½ years As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent's B value may have occurred at December 31, 2025. The controller for Cheyenne estimates the expected future cash flows from Patent B will be as follows. $2,200 17 years $2,200 10 years Expected Future Cash Flows $2,200 4 years The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year). Compute the total carrying amount of Cheyenne's patents on its December 31, 2025, balance sheet.

Cheyenne Industries has the following patents on its December 31, 2024, balance sheet. Patent Item Date Acquired Useful life at Date Acquired Patent A Patent B Patent C Year 2026 2027 Initial Cost 2028 $44,268 $17,040 $22,560 3/1/21 7/1/22 9/1/23 The following events occurred during the year ended December 31, 2025. Research and Development costs of $247,000 were incurred during the year Patent D was purchased on July 1 for $37,848. The patent has a useful life of 9 ½ years As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent's B value may have occurred at December 31, 2025. The controller for Cheyenne estimates the expected future cash flows from Patent B will be as follows. $2,200 17 years $2,200 10 years Expected Future Cash Flows $2,200 4 years The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year). Compute the total carrying amount of Cheyenne's patents on its December 31, 2025, balance sheet.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Cheyenne Industries has the following patents on its December 31, 2024, balance sheet. Date Acquired Useful life at Date Acquired Patent Item Patent A Patent B Patent C Year 2026 2027 Initial Cost 2028 $44,268 $17,040 $22,560 3/1/21 7/1/22 9/1/23 The following events occurred during the year ended December 31, 2025. Research and Development costs of $247,000 were incurred during the year Patent D was purchased on July 1 for $37,848. The patent has a useful life of 9 ½ years As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent's B value may have occurred at December 31, 2025. The controller for Cheyenne estimates the expected future cash flows from Patent B will be as follows. $2,200 17 years $2,200 10 years Expected Future Cash Flows $2,200 4 years The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year). Compute the total carrying amount of Cheyenne's patents on its December 31, 2025, balance sheet.
Transcribed Image Text:Cheyenne Industries has the following patents on its December 31, 2024, balance sheet. Date Acquired Useful life at Date Acquired Patent Item Patent A Patent B Patent C Year 2026 2027 Initial Cost 2028 $44,268 $17,040 $22,560 3/1/21 7/1/22 9/1/23 The following events occurred during the year ended December 31, 2025. Research and Development costs of $247,000 were incurred during the year Patent D was purchased on July 1 for $37,848. The patent has a useful life of 9 ½ years As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent's B value may have occurred at December 31, 2025. The controller for Cheyenne estimates the expected future cash flows from Patent B will be as follows. $2,200 17 years $2,200 10 years Expected Future Cash Flows $2,200 4 years The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year). Compute the total carrying amount of Cheyenne's patents on its December 31, 2025, balance sheet.
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