LMN Company purchased another company on January 1, 2015, resulting in the recording of goodwill of $2,000,000 and a patent valued at $120,000. The patent has a remaining life of 10 years. At December 31, 2015, it was determined that an impairment in the value of the goodwill of $500,000 had occurred. 1. Prepare any necessary journal entries affecting the goodwill and patent accounts at December 31, 2015.

LMN Company purchased another company on January 1, 2015, resulting in the recording of goodwill of $2,000,000 and a patent valued at $120,000. The patent has a remaining life of 10 years. At December 31, 2015, it was determined that an impairment in the value of the goodwill of $500,000 had occurred. 1. Prepare any necessary journal entries affecting the goodwill and patent accounts at December 31, 2015.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 11PB: On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received...

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On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received $12,000,000 in net assets. In 2016, the market value of the goodwill obtained from Branta Corp. was valued at $4,000,000, but in 2017 it dropped to $2,000,000. Prepare the journal entry for the creation of goodwill and the entry to record any impairments to it in subsequent years.
Martinez, Inc. acquired a patent on January 1, 2017 for $41,700 cash. The patent was estimated to have a useful life of 10 years with no residual value. On December 31, 2018, before any adjustments were recorded for the year, management determined that the remaining useful life was 7 years (with that new estimate being effective as of January 1, 2018). On June 30, 2019, the patent was sold for $26,700.Required: Prepare the journal entry to record the acquisition of the patent on January 1, 2017. Prepare the journal entry to record the annual amortization for 2017. Compute the amount of amortization that would be recorded in 2018. Determine the gain (loss) on sale on June 30, 2019. Prepare the journal entry to record the sale of the patent on June 30, 2019.
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The following are the transactions concerning the intangible assets of Healy Bros. Corporation for 2015: Jan 1 - Paid $200 000 for the artistic development of a trademark. Also paid $50 000 to register the trademark and for the associated legal fees. The useful life of the trademark is indefinite. Feb 15 - Purchased a patent with an eight year useful life for $480 000. March 15- Goodwill was purchased along with the assets of another company for $50 000. It has an indefinite useful life. April 1 - Research and development costs were incurred amounting to $550 000. There is no marketable product identified to these costs. Dec 31 - Any amortization on the previous intangible assets is calculated and recorded. a) Record the journal entries for the above transactions. b) Record the entries needed for amortization of these assets as at December 31, 2015.
Avery Company acquires the net assets of Iowa Company on July 1, 2015. The net assets acquired include plant assets that are provisionally estimated to have a fair value of $600,000 with a 10-year usable life and no salvage value. Depreciation is recorded based on months in service. The remaining unallocated amount of the price paid is $300,000, which is recorded as goodwill. At the end of 2015, Avery prepares the following statements (includes Iowa Company for the last six months):In March 2016, the final estimated fair value of the acquired plant assets is $700,000 with no change in the estimate of useful life or salvage value. 1. Prepare any journal entries required inMarch 2016. 2. Prepare the revised balance sheet and income statement for 2015 that will be included in the 2016 comparative statements.
Brigade company purchased a equipment for 68,500 on January 1, 2017, with service life of six years and an estimated residual value of 4,000. It has recorded depreciation of the equipment using straight-line method (SLM). On December 31, 2019, before making any annual adjusting entries, the equipment was exchanged for new machinery having a fair value of 35,000. The transaction has commercial substance. Use this information to prepare a General Journal entries (without explanation) required to record the events for December 31, 2019.
Springer Company had three Intangible assets at the end of 2020 (end of the accounting year): a. A copyright purchased on January 1, 2020, for a cash cost of $15,700. The copyright is expected to have a 10-year useful lIife to Springer. b. Goodwill of $77,000 from the purchase of the Hartford Company on July 1, 2019. CA patent purchased on January 1, 2019, for $56,000. The inventor had registered the patent with the U.S. Patent and Trademark Office on January 1, 2015. Springer intends to use the patent for its remalning life. Required: 1. Compute the amortization expense of each intangible for the year ended December 31, 2020. The company does not use contra- accounts. 2a. Show how the expenses related to the three intangible assets should be reported on the Income statement for 2020. 2b. Show how the three intangible assets should be reported on the balance sheet for 2020. (Assume there has been no Impairment of goodwill.)
Skysong Industries has the following patents on its December 31, 2024, balance sheet. Patent Item Initial Cost Date Acquired Useful Life at Date Acquired Patent A 3/1/21 17 years $41,616 $15,480 Patent B 7/1/22 10 years Patent C $16,320 9/1/23 4 years The following events occurred during the year ended December 31, 2025. 1. Research and development costs of $234,000 were incurred during the year. 2. Patent D was purchased on July 1 for $47,196. This patent has a useful life of 91/2 years. 3. As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent B's value may have occurred at December 31, 2025. The controller for Skysong estimates the expected future cash flows from Patent B will be as follows.
On December 31, it was estimated that a goodwill of $6,000,000 was impaired. In addition, on April 1, a patent with an estimated useful economic life of 12 years was acquired for $650,000. Required : Given the above transactions, make the following journal entries: An adjusting entry on December 31, for impaired goodwill An adjusting entry on December 31, for the amortization of the patent rights
Reported in the ledger of Mayumi Company On December 31, 2017, is a Patent account with a balance of P120,000, and accumulated amortization of P 60,000. The Patent is being amortized for its useful life of eight years. On July 1, 2018, Mayumi spent P 30,000 to defend the patent against an infringement suit. On January 1, 2019, with the rapid change in technology, the company determined that the patent will be of no value to the company and that a loss on patent obsolescence has to be recognized.How much is the loss on patent obsolescence?
On December 31, it was estimated that a goodwill of $1,500,000was impaired. I addition on October 1, a patent with an estimated useful life of 10 years was acquired for $750,000. Required: Given the above transactions, make the following journal entries: a. An adjusting entry on December 31, for impaired goodwill b. An adjusting entry on December 31, for the amortization of the patent rights.
Windsor Industries has the following patents on its December 31, 2024, balance sheet. Useful Life at Date Acquired Patent Item Patent A Patent B Patent C 3. The following events occurred during the year ended December 31, 2025. Year 1. Research and development costs of $236,000 were incurred during the year. 2 Patent D was purchased on July 1 for $47,310. This patent has a useful life of 9¹/2 years. 2026 2027 Initial Cost Date Acquired $42,029 $15.720 $17,280 2028 (a) Expected Future Cash Flows As a result of reduced demands for certain products protected by Patent B, a possible Impairment of Patent B's value may have occurred at December 31, 2025. The controller for Windsor estimates the expected future cash flows from Patent B will be as follows. $2,100 2,100 2,100 3/1/21 7/1/22 9/1/23 17 years 10 years 4 years The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year.) Click here to view factor tables. Your answer is…