financial account On January 1, 2012, Brendan, Inc., reports net assets of $849,650although equipment (with a four-year life) having a book value of$464,000 is worth $544,750 and an unrecorded patent is valued at$46,900. Hope Corporation pays $781,840 on that date for an 80percent ownership in Brendan.If the patent is to be written off over a 10-year period, at whatamount should it be reported on consolidated statements onDecember 31, 2013?a. $37,520b. $33,768c. $42,210d. $30,016

Step 1: Definition of Consolidated StatementsConsolidated financial statements combine the financial…

Answered: On January 1, 2012, Brendan, Inc.,…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 62P

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On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
Petes Petroleum, Inc., an SEC registrant with a calendar year-end, is in the business of constructing and operating offs] lore oil platforms. Petes Petroleum is required legally to dismantle and remove the platforms at the end of their useful lives, which is estimated to be 10 years. On January 1, 2019, Pete constructed and began operating an offshore oil platform off the coast of Brazil. The total capitalized cost to construct the platform was 3,700,000. In addition, while the future cost of dismantling the oil platform is difficult to estimate, Pete believes there is a 40% chance that the future cost will be 1,425,000, a 40% chance it will be 1,650,000, and a 20% chance that it will cost 2,125,000. The appropriate discount rate is 12%, and Pete uses the straight-line method of depreciation. Required: 1. Prepare the journal entries that Pete should record in 2019 related to the oil platform. 2. Prepare an amortization schedule for the asset retirement obligation. 3. Next Level Prepare a table showing the effect of accounting for the asset retirement obligation on assets, liabilities, shareholders equity, and net income relative to accounting for the associated costs at the end of the assets service life when the expenditure is made.
For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a seventeen-year remaining legal life was purchased for $850,000. The patent will be usable for another six years. B. A patent was acquired on a new tablet. The cost of the patent itself was only $12,000, but the market value of the patent is $150,000. The company expects to be able to use this patent for all twenty years of its life.
On January 1, 2020, Grand Haven, Inc., reports net assets of $843,200 although equipment (with a four-year remaining life) having a book value of $463,000 is worth $525,000 and an unrecorded patent is valued at $46,800. Van Buren Corporation pays $761,600 on that date to acquire an 80 percent equity ownership in Grand Haven. If the patent has a remaining life of nine years, at what amount should the patent be reported on Van Buren's consolidated balance sheet at December 31, 2021? Multiple Choice $36,400. $29,120. $41,600. $32,760.
On January 1, 2007, Taft Co. purchased a patent for 714,000. The patent is being amortized over its remaining legal life of fifteenyears expiring on January 1, 2022. During 2010, Taft determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2010?a.428,400b.489,600c.504,000d.523,600
On January 1, 2023, Bertrand Incorporated paid $70,800 for a 40% interest in Chestnut Corporation's common stock. This investee had assets with a book value of $235,000 and liabilities of $95000. A patent held by Chestnut having a book value of $8900 was actually worth $25,400. This patent had a six year remaining life. Any further excess cost associated with this acquisition was attributed to an indefinite-lived asset. During 2023, Chestnut earned income of $45,700 and declared and paid dividends of $20,000. During 2024, the fair value of Bertrand's investment in Chestnut had risen from $84,080 to $88,960. Assuming Bertrand uses the quity method, what balnace should appear in the investment in Chestnut account as of December 31, 2024? Assuming Bertrand uses fair-value accounting, what income from the investment in Chestnut should be reported for 2024?
On January 1, 2023, Bertrand, Incorporated, paid $81,200 for a 40 percent interest in Chestnut Corporation’s common stock. This investee had assets with a book value of $219,000 and liabilities of $80,500. A patent held by Chestnut having a $7,400 book value was actually worth $55,400. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to an indefinite-lived asset. During 2023, Chestnut earned income of $54,200 and declared and paid dividends of $18,000. In 2024, it had income of $66,700 and dividends of $23,000. During 2024, the fair value of Bertrand’s investment in Chestnut had risen from $95,480 to $98,960. Assuming Bertrand uses the equity method, what balance should appear in the Investment in Chestnut account as of December 31, 2024? Assuming Bertrand uses fair-value accounting, what income from the investment in Chestnut should be reported for 2024?
On January 2, 2018,Judd Co. bought a trademark from Krug Co. for P500,000. Judd retained an independent consultant, who estimated the trademark’s remaining life to be fifty years. Its unamortized cost on Krug’s accounting records was P380,000. In Judd’s December 31, 2018 balance sheet, what amount should be reported as accumulated amortization? a P7,600 b P9,500 c P10,000 d P12,500
choose best answer
On January 1, 2020, Alison, Inc., paid $83,800 for a 40 percent interest in Holister Corporation’s common stock. This investee had assets with a book value of $290,500 and liabilities of $117,000. A patent held by Holister having a $13,600 book value was actually worth $31,600. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to goodwill. During 2020, Holister earned income of $40,700 and declared and paid dividends of $14,000. In 2021, it had income of $70,000 and dividends of $19,000. During 2021, the fair value of Allison’s investment in Holister had risen from $95,380 to $106,180. Assuming Alison uses the equity method, what balance should appear in the Investment in Holister account as of December 31, 2021? Assuming Alison uses fair-value accounting, what income from the investment in Holister should be reported for 2021?
On January 2, 2024, Cole Inc. paid $100,000 for a 30% interest in Johnas Corp. This investee had assets with a book value of $550,000 and liabilities of $300,000. A patent held by Johnas having a book value of $10,000 was actually worth $40,000 with a six-year remaining life. Any goodwill associated with this acquisition is considered to have an indefinite life. In 2024, Johnas reported a net income of $50,000 and paid dividends of $20,000 while in 2025 it reported a net income of $75,000 and dividends of $30,000. Assume Cole has the ability to significantly influence the operations of Johnas. The equity in income of Johnas for 2025, is: O $22,500. O $21,000. O $12,000. O $13,500. $75,000.

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