Cullumber Corp's controller was preparing the adjusting entries for the company's year ended December 31, 2023, when the vice- president of finance called him into her office. "Jean-Pierre," she said, "I've been considering a couple of matters that may require different treatment this year. First, the patent we acquired in early January 2021 for $591,000 will now likely be used until the end of 2025 and then be sold for $179,000. We previously thought that we'd use it for 10 years in total and then be able to sell it for $118,000. We've been using straight-line amortization on the patent." "Second, I just discovered that the property we bought on July 2, 2020, for $267,200 was charged entirely to the Land account instead of being allocated between Land ($62,200) and Building ($205,000). The building should be of use to us for a total of 20 years. At that point, it'll be sold and we should be able to realize at least $47,000 from the sale of the building." "Please let me know how these changes should be accounted for and what effect they will have on the financial statements." Cullumber follows IFRS. Answer the following, ignoring income tax considerations and assuming that the company has not previously reported quarterly results. (b) Assuming that no amortization has been recorded yet for the patent for 2023, prepare the December 31, 2023 entries that are necessary to make the accounting changes and to record patent amortization expense for 2023. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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.) Date Account Titles and Explanation Dec. 31 Dec. 31 (To record amortization expense) Debit Credit NO |||||
Cullumber Corp's controller was preparing the adjusting entries for the company's year ended December 31, 2023, when the vice- president of finance called him into her office. "Jean-Pierre," she said, "I've been considering a couple of matters that may require different treatment this year. First, the patent we acquired in early January 2021 for $591,000 will now likely be used until the end of 2025 and then be sold for $179,000. We previously thought that we'd use it for 10 years in total and then be able to sell it for $118,000. We've been using straight-line amortization on the patent." "Second, I just discovered that the property we bought on July 2, 2020, for $267,200 was charged entirely to the Land account instead of being allocated between Land ($62,200) and Building ($205,000). The building should be of use to us for a total of 20 years. At that point, it'll be sold and we should be able to realize at least $47,000 from the sale of the building." "Please let me know how these changes should be accounted for and what effect they will have on the financial statements." Cullumber follows IFRS. Answer the following, ignoring income tax considerations and assuming that the company has not previously reported quarterly results. (b) Assuming that no amortization has been recorded yet for the patent for 2023, prepare the December 31, 2023 entries that are necessary to make the accounting changes and to record patent amortization expense for 2023. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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.) Date Account Titles and Explanation Dec. 31 Dec. 31 (To record amortization expense) Debit Credit NO |||||
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Cullumber Corp's controller was preparing the adjusting entries for the company's year ended December 31, 2023, when the vice-
president of finance called him into her office.
*Jean-Pierre," she said, "I've been considering a couple of matters that may require different treatment this year. First, the patent we
acquired in early January 2021 for $591,000 will now likely be used until the end of 2025 and then be sold for $179,000. We
previously thought that we'd use it for 10 years in total and then be able to sell it for $118,000. We've been using straight-line
amortization on the patent."
"Second, I just discovered that the property we bought on July 2, 2020, for $267,200 was charged entirely to the Land account instead
of being allocated between Land ($62,200) and Building ($205,000). The building should be of use to us for a total of 20 years. At that
point, it'll be sold and we should be able to realize at least $47,000 from the sale of the building."
"Please let me know how these changes should be accounted for and what effect they will have on the financial statements."
Cullumber follows IFRS. Answer the following, ignoring income tax considerations and assuming that the company has not previously
reported quarterly results.
(b)
Assuming that no amortization has been recorded yet for the patent for 2023, prepare the December 31, 2023 entries that are
necessary to make the accounting changes and to record patent amortization expense for 2023. (List all debit entries before credit
entries. Credit account titles are automatically indented when the 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.)
Date Account Titles and Explanation
Dec. 31
Dec. 31
(To record amortization expense)
Debit
Credit
00
I
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 1 images
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education