Danika Manufacturing purchased a patent from Clayton Industries on January 1, 2015, by paying $10,500 in cash and issuing a $35,000 noninterest-bearing note payable. The note called for six annual payments of $5,000 starting on December 31, 2015. The patent had a remaining legal life of 14 years. Danika expected that the patent would have a useful life of 15 years. Danika' borrowing rate was 6%. Danika uses the straight-line method to amortize intangibles. In 2019, Danika unsuccessfully sued a competitor for patent infringement. The company paid legal fees of $5,000 on June 30, 2019. What was the carrying value of the Patent at December 31, 2019? Assume no impairment adjustment is required. Group of answer choices A) S22,556 B) S29,250 C) S28,987 D) S22,293
Danika Manufacturing purchased a patent from Clayton Industries on January 1, 2015, by paying $10,500 in cash and issuing a $35,000 noninterest-bearing note payable. The note called for six annual payments of $5,000 starting on December 31, 2015. The patent had a remaining legal life of 14 years. Danika expected that the patent would have a useful life of 15 years. Danika' borrowing rate was 6%. Danika uses the straight-line method to amortize intangibles. In 2019, Danika unsuccessfully sued a competitor for patent infringement. The company paid legal fees of $5,000 on June 30, 2019. What was the carrying value of the Patent at December 31, 2019? Assume no impairment adjustment is required. Group of answer choices A) S22,556 B) S29,250 C) S28,987 D) S22,293
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Danika Manufacturing purchased a patent from Clayton Industries on January 1, 2015, by paying
S10,500 in cash and issuing a $35,000 noninterest-bearing note payable. The note called for six
annual payments of $5,000 starting on December 31, 2015. The patent had a remaining legal life of
14 years. Danika expected that the patent would have a useful life of 15 years. Danika' borrowing
rate was 6%. Danika uses the straight-line method to amortize intangibles.
In 2019, Danika unsuccessfully sued a competitor for patent infringement. The company paid legal
fees of $5,000 on June 30, 2019. What was the carrying value of the Patent at December 31, 2019?
Assume no impairment adjustment is required. Group of answer choices
A) S22,556
B) $29,250
C) $28,987
D) S22,293
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