During the current year, Black Corporation incurred the following expenditures which should be recorded either as operating expenses or as intangible assets and name the asset and explain why you categorize particular asset.
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- During the current year, Black Corporation incurred the following expenditures which should berecorded either as operating expenses or as intangible assets:a. Expenditures were made for the training of new employees. The average employee remainswith the company for five years, but is trained for a new position every two years.b. Black purchased a controlling interest in a vinyl flooring company. The expenditure resultedin the recording of a significant amount of goodwill. Black expects to earn above-averagereturns on this investment indefinitely.c. Black incurred large amounts of research and development costs in developing a dirt-resistantcarpet fiber. The company expects that the fiber will be patented and that sales of the resultingproducts will contribute to revenue for at least 25 years. The legal life of the patent, however,will be only 20 years.d. Black made an expenditure to acquire the patent on a popular carpet cleaner. The patent had aremaining legal life of 14 years, but…During the current year, Omega Products Corporation incurred the following expenditures whichshould be recorded either as operating expenses or as intangible assets:a. Expenditures were made for the training of new employees. The average employee remainswith the company for five years, but is trained for a new position every two years.b. Omega purchased a controlling interest in a wallpaper company. The expenditure resulted inrecording a significant amount of goodwill. Omega expects to earn above-average returns onthis investment indefinitely.c. Omega incurred large amounts of research and development costs in developing a superiorproduct. The company expects that it will be patented and that sales of the resulting productswill contribute to revenue for at least 40 years. The legal life of the patent, however, will be only20 years.d. Omega made an expenditure to acquire the patent on a whatsa. The patent had a remaining legallife of 10 years, but Omega expects to produce and sell the…Western Wholesale Foods incurs the following expenditures during the current fiscal year. How should Western account for each of these expenditures? Capitalize and depreciate over the useful life of the asset. OR Expense in the period incurred. 1. Salaries for the repair technicians, $154,000 2. Remodeling of the executive offices, $84,700 3. Annual maintenance costs related to its machinery, $70,400 4. Improvement of the production line resulting in an increase in productivity, $33,800 5. Addition of a sprinkler system to the manufacturing facility to reduce the risk of fire damage, $37,900
- This year, Sigma, Incorporated generated $637,500 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months: Initial Basis $ 165,200 110,800 Accumulated Depreciation $0 88,640 223,500 206,000 Marketable securities Production equipment Business realty: Land Building. "Through date of sale. Required: a. Compute Sigma's taxable income assuming that it used the straight-line method to calculate depreciation on the building and has no nonrecaptured Section 1231 losses. b. Recompute taxable income assuming that Sigma sold the securities for $169,400 rather than $73,750. Complete this question by entering your answers in the tabs below. Sale Price $ 73,750 38,000 0 61,800 236,750 231,000 Required A Required B Compute Sigma's taxable income assuming that it used the straight-line method to calculate depreciation on the building and has no nonrecaptured Section 1231 losses. Taxable incomeAt the beginning of the year, Anna began a calendar-year business and placed in service the following assets during the year: Asset Date Acquired Cost Basis Computers 1/30 $ 28,000 Office desks 2/15 $ 32,000 Machinery 7/25 $ 75,000 Office building 8/13 $ 400,000 Assuming Anna does not elect §179 expensing and elects not to use bonus depreciation, answer the following questions: What is Anna's year 1 cost recovery for each asset?Hauswirth Corporation sold (or exchanged) a warehouse in year 0. Hauswirth bought the warehouse several years ago for $72.500. and it has claimed $24,800 of depreciation expense against the building. Required: a. Assuming that Houswirth receives $59,700 in cash for the warehouse, compute the amount and character of Hauswirth's recognized gain or loss on the sale. b. Assuming that Hauswirth exchanges the warehouse in a like-kind exchange for some land with a fair market value of $59,700 compute Houswirth's realized gain or loss, recognized gain or loss, deferred gain or loss, and basis in the new land. c. Assuming that Houswirth receives $26.500 in cash in year 0 and a $57,000 note receivable that is payable in year 1, compute the amount and character of Hauswirth's gain or loss in year 0 and in year 1. Complete this question by entering your answers in the tabs below. Required a Required b Required c Assuming that Hauswirth receives $59,700 in cash for the warehouse, compute the amount…
- Select financial information for Logistical Corp. as at December 31, 20X6, follows: Please find the attached image Additional information is as follows: • During the year, Logistical sold equipment for proceeds of $50,000. The equipment had a cost of $80,000 and accumulated depreciation of $35,000.• During the year, a review of Logistical’s goodwill was completed, and it was determined that the asset was impaired and should be written down by $3,000.• Logistical did not purchase any additional investments in the year. Any changes in the fair value of investments have been adjusted through other comprehensive income. These securities are not cash equivalents.• During the year, a new lease was signed for equipment that had a fair market value of $45,000. Depreciation expense for the year totalled $1,000. The new lease was signed in the year, which required a $7,000 payment at the start of the lease.• Logistical elects to classify any interest paid and dividends paid as financing…The Horstmeyer Corporation commenced operations early in 2021. A number of expenditures were made during 2021 that were debited to one account called intangible asset. A recap of the $252,500 balance in this account at the end of 2021 is as follows: Date Transaction Amount State incorporation fees and legal costs related to organizing the corporation Fire insurance premium for three-year period Purchased a copyright Research and development costs Legal fees for filing a patent on a new product resulting from an R&D project $ 9,500 7,500 40,000 60, 000 7,500 32,000 60, 000 36,000 February 3 March 1 March 15 April 30 June 15 September 30 Legal fee for successful defense of patent developed above Entered into a 10-year franchise agreement with franchisor Advertising costs October 13 Various Total $252,500 Required: Prepare the necessary journal entry to clear the intangible asset account and to set up accounts for separate intangible assets, other types of assets, and expenses indicated…On November 10 of year 1, Javier purchased a building, including the land it was on, to assemble his new equipment. The total cost of the purchase was $1,200,000; $300,000 was allocated to the basis of the land and the remaining $900,000 was allocated to the basis of the building. a) Assume the building was purchased and placed in service on March 3 instead of November 10. Using MACRS, what is Javier's depreciation deduction on the building for years 1 through 3? b) Assume the building is residential property. Using MACRS, what is Javier's depreciation deduction on the building for years 1 through 3?c) What would be the depreciation for 2022, 2023, and 2024 if the property were nonresidential property purchased and placed in service November 10, 2005 (assume the same original basis)?
- At the beginning of the year, Patrick Company acquired a computer to be used in its operations. The computer was delivered by the supplier, installed by Patrick, and placed into operation. The estimated useful life of the computer is five years, and its estimated residual value is significant. Required: 1. a. What costs should Patrick capitalize for the computer? b. What is the objective of depreciation accounting? 2. What is the rationale for using accelerated depreciation methods?A company purchased a building on 1 April 20X1 for $100,000. The asset had a useful life at that date of 40 years. On 1 April 20X3 the company revalued the building to its current fair value of $120,000. Required: What are the gain/loss on revaluation and the impact on the accounts (i.e. in the Statement of Financial Position and Statement of Profit or Loss)?The following intangible assets were purchased by Goldstein Corporation: A. A patent with a remaining legal life of twelve years is bought, and Goldstein expects to be able to use it for seven years. B. A copyright with a remaining life of thirty years is purchased, and Goldstein expects to be able to use it for ten years. For each of these situations, determine the useful life over which Goldstein will amortize the intangible assets.