In 2026, the company successfully defends the patent in extended litigation at a cost of $51,200, thereby extending the patent life to December 31, 2033. What is the proper way to account for this cost? Also, record patent amortization (full year) in 2026. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter 0 for the amounts. List all debit entries before credit entries.) Account Titles and Explanation (To record legal cost of successfully defending patent) (To record one year's amortization) Debit Credit
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- Sandstorm Corporation decides to develop a new line of paints. The project begins in 2023 in the U.S. Sandstorm incurs the following expenses in 2023 in connection with the project: Salaries $90,000 Materials 27,000 Depreciation on equipment 13,500 The benefits from the project will be realized starting in July 2024. If an amount is zero, enter "0". Sandstorm Corporation capitalizes and amortizes its research and experimental expenditures. What are its related deductions in 2023 and 2024?2023: $fill in the blank 12024: $fill in the blank 2Early in 2024, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2024 at a cost of $15 million. Of this amount, $11 million was spent before technological feasibility was established. Excalibur expects a useful life of five years for the new product with total revenues of $20 million. During 2025, revenue of $6 million was recognized. Required: Prepare a journal entry to record the 2024 development costs.In early 2024, Menz Corporation acquired NeuroLab to obtain technology that NeuroLab was in the process of developing. The total acquisition cost included $2 million for this technology. At the time of acquisition, the technology had not yet reached the point of technological feasibility. During the remainder of 2024, Menz spent an additional $1 million to improve the technology, which then reached the point of technological feasibility by the end of the year. The new technology was expected to provide benefits to Menz over the subsequent five years. What amount of research and development expense would Menz record in 2024? Multiple Choice $2 million $3 million O $1 million $0
- Assume that it is January 1, 2022, and that the Mendoza Company is considering the replacement of a machine that has been used for the past 3 years in a special project for the company. This project is expected to continue for an additional 5 years (i.e., until the end of 2026). Mendoza will either keep the existing machine for another 5 years (8 years total) or replace the existing machine now with a new model that has a 5-year estimated life. Pertinent facts regarding this decision are as follows: Keep Existing Machine Purchase New Machine Purchase price of machine (including transportation, setup charges, etc.) Useful life (determined at time of acquisition) Estimated salvage value, end of 2026* Expected cash operating costs, per year: Variable (per unit produced/sold) Fixed costs (total) Estimated salvage (terminal) values: January 1, 2022 December 31, 2026 Net working capital committed at time of acquisition of existing machine (all fully recovered at end of project, December 31,…DEF Corporation built a factory that produces widgets at a cost of $100 million. The factory began its operation on January 1, 2022. The factory has a licensed to be in operations for 30 years and after that, the factory must be demolished and disposed of. At January 1, 2022, the cost of demolishing the factory was estimated to be $20 million. An appropriate discount rate is 5%, when the present value of $1 is $0.2314 in 30 years’ time. Requirement a.) What is the value of the provision in the statement of financial position at December 31, 2022 b.) What is the carrying amount of the factory at December 31, 2022?A BoxerLoi33 company is deciding to undertake a project. The project is quite profitable as it will generate net cash inflows of $20 million per year for 5 years. However, it will cause pollution to the nearby residents. The company can mitigate this pollution by investing additional 10 million at Year 0 but legally it is not compulsory for it to do so. Undertaking this project would cost $60 million without mitigation. If the firm does invest in mitigation, the annual cash inflows would be $22 million. The risk adjusted WACC is 12%. Calculate the IRR and NPV with and without mitigation. 2.Using Picture formula can the project be undertaken? If so, should the firm do mitigation?
- On December 1, 2021, HP Corp. is contemplating to invest into a new equipment costing P2,500,000 plus an installation cost of P200,000 to replace its old equipment that has a book value of P400,000 and a remaining useful life of 4 years. The estimated useful life of the new equipment is 4 years and has a salvage value of P500,000. If the company will favor the replacement decisions, the old equipment can be sold for P150,000 but additional working capital investment must be made amounting to P400,000. However, the company must incur a repair cost of P180,000 to continuously use the old equipment. The annual cash operating costs of the old equipment is P4,000,000 while the annual cash operating cost of the new equipment is P2,400,00. At the end of the useful life, cost to remove the new equipment will amount to P100,000. The company uses a tax rate of 35%, requires a payback period is 2.5 years or less, and accepts a minimum accounting rate of return is 15%. Compute for the net…On December 1, 2021, HP Corp. is contemplating to invest into a new equipment costing P2,500,000 plus an installation cost of P200,000 to replace its old equipment that has a book value of P400,000 and a remaining useful life of 4 years. The estimated useful life of the new equipment is 4 years and has a salvage value of P500,000. If the company will favor the replacement decisions, the old equipment can be sold for P150,000 but additional working capital investment must be made amounting to P400,000. However, the company must incur a repair cost of P180,000 to continuously use the old equipment. Annual cash operating costs of the old equipment is P4,000,000 while the annual cash operating cost of the new equipment is P2,400,000. At the end of the useful life, cost to remove the new equipment will amount to P100,000 . The company uses a tax rate of 35% , requires a payback period is 2.5 years or less, and accepts a minimum accounting rate of return is 15%. Compute for the net…Simon Machine Tools Company is considering the purchase of a new set ofmachine tools to process special orders over the next three years. The following financial information is available:1. Without the project, the company expects to have a taxable income of$400,000 each year from its regular business over the next three years. 2. This three-year project requires the purchase of a new set of machine tools at a cost of $50,000. The equipment falls into the MACRS three-year class. The tools will be sold at the end of the project life for $10,000. The project will bring in additional annual revenue of $90,000, but it is expected to incur additional annual operating costs of $25,000.(a) What are the additional taxable incomes (from undertaking the project)during years 1 through 3, respectively?(b) What arc the additional income taxes (from undertaking the new orders) during years 1 through 3, respectively?
- In 2021, Edwards Corporation incurred research and development costs as follows: Materials and equipment P105,000 Personnel 120,000 Indirect costs 150,000 P375,000 These costs relate to a product that will be marketed in 2022. It is estimated that these costs will be recouped by December 31, 2023, but its process has not achieved economic viability. The equipment has no alternative future use. What is the amount of research and development costs that should be expensed in 2021? a. PO. b. P225,000. c. P270,000. d. P375,000.A construction company is considering acquiring a new earthmover. The purchase price is $110,000, and an additional $25,000 is required to modify the equipment for special use by the company. The equipment falls into the MACRS seven-year classification (the tax life), and it will be sold after five years (the project life) for $50,000. The purchase of the earthmover will have no effect on revenues, but the machine is expected to save the firm $68,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 25%. Assume that the initial investment is to be financed by a bank loan at an interest rate of 10% payable annually. Determine the after-tax cash flows by using the generalized cash flow approach and the worth of the investment for this project if the firm's MARR known to be 12%. Click the icon to view the MACRS depreciation schedules. Click the icon to view the interest factors for discrete compounding when /= 10% per year. Click the icon to view the…Assume that it is January 1. 2022. and that the Mendoza Company is considering the replacement of a machine that has been used for the past 3 years in a special project for the company. This project is expected to continue for an additional 5 years (i.e., until the end of 2026). Mendoza will either keep the existing machine for another 5 years (8 years total) or replace the existing machine now with a new model that has a 5-year estimated life. Pertinent facts regarding this decision ere as follows Purchase price of machine (inc luding transportation, setup charges, etc.) Useful life (determined at time of acquisition) Estimated salvage value, end of 2026 Expected cash operating costs, per year: Variable (per unit produced/sold) Fixed costs (total) Estimated salvage (terminal) values: Janoary 1, 2022 Decenber 31, 2026 Net working capital connitted at time of acquisition of existing nachine (all fully recovered at end of project, Decenber 31, 2026) Incremental net working capital…