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Clinton Company has provided information on Intangible assets as folows: 1. A patent was purchased from Lou Company for $1,230,000 on January 1, 2018. Clinton 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 $850,000 when Lou sold it to Clinton. 2. During 2019, a franchise was purchased from Rink Company for $550,000. In addition, 6% of revenue from the franchise must be pald to Rink. Revenue from the franchise for 2019 was $2,500,000. Clinton estimates the useful life of the franchise to be 5 years and takes a full year's amortization in the year of purchase. 3. Clinton incurred RAD costs in 2019 as follows: Materials and equipment $147,000 Personnel 178,000 Indirect costs 69,000 $394,000 Clinton estimates that these costs will be recouped by December 31, 2020. 4. On January 1, 2019, Clinton estimates, based on new events, that the remaining life of the patent purchased on January 1, 2018, is only 10 years from Januaryt, 2019. Required: 1. Prepare a schedule showing the intangibles section of Clinton's balance sheet at December 31, 2019. Clinton Company Intangible Assets Section of Balance Sheet December 31, 2019 Patent, net (Schedule 1) Franchise from Rink Company, net (Schedule 2) Intangible essets Schedule 1 Computation of Patent from Lou Compan

Clinton Company has provided information on Intangible assets as folows: 1. A patent was purchased from Lou Company for $1,230,000 on January 1, 2018. Clinton 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 $850,000 when Lou sold it to Clinton. 2. During 2019, a franchise was purchased from Rink Company for $550,000. In addition, 6% of revenue from the franchise must be pald to Rink. Revenue from the franchise for 2019 was $2,500,000. Clinton estimates the useful life of the franchise to be 5 years and takes a full year's amortization in the year of purchase. 3. Clinton incurred RAD costs in 2019 as follows: Materials and equipment $147,000 Personnel 178,000 Indirect costs 69,000 $394,000 Clinton estimates that these costs will be recouped by December 31, 2020. 4. On January 1, 2019, Clinton estimates, based on new events, that the remaining life of the patent purchased on January 1, 2018, is only 10 years from Januaryt, 2019. Required: 1. Prepare a schedule showing the intangibles section of Clinton's balance sheet at December 31, 2019. Clinton Company Intangible Assets Section of Balance Sheet December 31, 2019 Patent, net (Schedule 1) Franchise from Rink Company, net (Schedule 2) Intangible essets Schedule 1 Computation of Patent from Lou Compan

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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Intangibles: Balance Sheet Presentation and Income Statement Effects Clinton Company has provided information on Intangible assets as follows: 1. A patent was purchased from Lou Company for $1,230,000 on January 1, 2018. Clinton 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 5850,000 when Lou sold it to Clinton. 2. During 2019, a franchise was purchased from Rink Company for $550,000, In addition, 6% of revenue from the franchise must be pald to Rink. Revenue from the franchise for 2019 was $2,500,000. Clinton estimates the useful life of the franchise to be 5 years and takes a full vear's amortization in the year of purchase. 3. Clinton incurred RAD costs in 2019 as follows: Materials and equipment $147,000 Personnel 178,000 Indirect costs 69,000 $394,000 Clinton estimates that these costs will be recouped by December 31, 2020. 4. On January 1, 2019, Clinton 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 Clinton's balance sheet at December 31, 2019. Clinton Company Intangible Assets Section of Balance Sheet December 31, 2019 Patent, net (Schedule 1) Franchise from Rink Company, net (Schedule 2) Intangible essets Schedule 1 Computation of Patent from Lou Company
Transcribed Image Text:Intangibles: Balance Sheet Presentation and Income Statement Effects Clinton Company has provided information on Intangible assets as follows: 1. A patent was purchased from Lou Company for $1,230,000 on January 1, 2018. Clinton 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 5850,000 when Lou sold it to Clinton. 2. During 2019, a franchise was purchased from Rink Company for $550,000, In addition, 6% of revenue from the franchise must be pald to Rink. Revenue from the franchise for 2019 was $2,500,000. Clinton estimates the useful life of the franchise to be 5 years and takes a full vear's amortization in the year of purchase. 3. Clinton incurred RAD costs in 2019 as follows: Materials and equipment $147,000 Personnel 178,000 Indirect costs 69,000 $394,000 Clinton estimates that these costs will be recouped by December 31, 2020. 4. On January 1, 2019, Clinton 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 Clinton's balance sheet at December 31, 2019. Clinton Company Intangible Assets Section of Balance Sheet December 31, 2019 Patent, net (Schedule 1) Franchise from Rink Company, net (Schedule 2) Intangible essets Schedule 1 Computation of Patent from Lou Company
Clinton Company Intangible Assets Section of Balance Sheet December 31, 2019 Patent, net (Schedule 1) Franchise from Rink Company, net (Schedule 2) Intangible assets Schedule 1: Computation of Patent from Lou Company Cost of patent at date of purchase Amortization of patent for 2018 Amortization of patent for 2019 Patent balance Schedule 2: Computation of Franchise from Rink Company Cost of franchise at date of purchase Amortization of franchise for 2019 Franchise balance %24
Transcribed Image Text:Clinton Company Intangible Assets Section of Balance Sheet December 31, 2019 Patent, net (Schedule 1) Franchise from Rink Company, net (Schedule 2) Intangible assets Schedule 1: Computation of Patent from Lou Company Cost of patent at date of purchase Amortization of patent for 2018 Amortization of patent for 2019 Patent balance Schedule 2: Computation of Franchise from Rink Company Cost of franchise at date of purchase Amortization of franchise for 2019 Franchise balance %24
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