Date(O0OAccount Titles and Explanation(To record amortization expense)DebitCredit Current Attempt in ProgressOn January 1, 2023 (the first day of its fiscal year) Swifty Ltd. acquired a patent which gave the company theright to use a production process. The process met the six criteria for capitalization as an intangible asset.Below is a listing of the events relating to the patent over the five fiscal years from 2023 through 2027:2023:2024:on January 1, acquired the patent for the production process for a cash payment of $18,600,000, anddetermined that the process had an indefinite useful life.on December 31, tested the patent for impairment and determined that its fair value was $19,800,000.2026:on December 31, tested the patent for impairment and determined that its fair value was $17,500,000.2025:on December 31, tested the patent for impairment and determined that its fair value was $18,000,000.on January 1, determined that the useful life of the patent was no longer indefinite, its carrying amountwas recoverable, its estimated remaining useful life was 7 years, its estimated residual value was $0and the pattern of economic benefits to be obtained from the patent during those 7 years was evenlyspread over those 7 years.on December 31, tested the process for impairment and recoverability and determined that its fairvalue was $1,200,000 and its carrying amount was recoverable.2027:on December 31, tested the patent for impairment and recoverability and determined that its fair valuewas $0 and its carrying amount was not recoverable.Prepare all journal entries related to the patent for the production process Swifty will record from January 1,2023 to December 31, 2027, using the cost recovery impairment model. (If no entry is required, select "NoEntry" for the account titles and enter 0 for the amounts. Credit account titles are automaticallyindented when amount is entered. Do not indent manually. List all debit entries before credit entries.)

According to the accounting principle known as the cost recovery method of revenue recognition, a…

On January 1, 2023 (the first day of its fiscal year) Swifty Ltd. acquired a patent which gave the company the right to use a production process. The process met the six criteria for capitalization as an intangible asset. Below is a listing of the events relating to the patent over the five fiscal years from 2023 through 2027: 2023: on January 1, acquired the patent for the production process for a cash payment of $18,600,000, and determined that the process had an indefinite useful life.

On January 1, 2023 (the first day of its fiscal year) Swifty Ltd. acquired a patent which gave the company the right to use a production process. The process met the six criteria for capitalization as an intangible asset. Below is a listing of the events relating to the patent over the five fiscal years from 2023 through 2027: 2023: on January 1, acquired the patent for the production process for a cash payment of $18,600,000, and determined that the process had an indefinite useful life.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2022, Martinez Corporation acquires a building at a cost of $195,000. The building is expected to have a 30-year life and no residual value. The asset is accounted for using the proportionate revaluation method and revaluation is carried out every two years. On December 31, 2023, the fair value of the building is appraised at $191,100 and on December 31, 2025 its fair value is $169,000. Prepare the appropriate journal entries for December 31, 2023 and December 31, 2025. Assume depreciation has been recorded. (Do not round intermediate calculations. Round final answers to O decimal places e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date < Account Titles and Explanation Debit Credit
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The following information relates to the intangible assets of Lettuce Express: a. On January 1, 2021, Lettuce Express completed the purchase of Farmers Produce, Inc., for $1,500,000 in cash. The fair value of the identifiable net assets of Farmers Produce was $1,350,000. b. Included in the assets purchased from Farmers Produce was a patent for a method of processing lettuce valued at $45,000. The original legal life of the patent was 20 years. There are still 17 years left on the patent, but Lettuce Express estimates the patent will be useful for only 10 more years. c. Lettuce Express acquired a franchise on July 1, 2021, by paying an initial franchise fee of $175,000. The contractual life of the franchise is seven years. Problem 7-6B Part 2 2. Prepare the intangible asset section of the December 31, 2021, balance sheet. LETTUCE EXPRESS Balance Sheet December 31, 2021 (Intangible Assets Section) Intangible Assets Franchises Patents Goodwill Total Intangible Assets 24
(Recording and Amortization of Intangibles) Parrish Company, organized in 2019, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2020: 1/2/20 Purchased patent (8-year life) $ 625,000 4/1/20 Purchased goodwill (indefinite life) 540,000 7/1/20 Purchased franchise with 10-year life; expiration date 7/1/30 675,000 8/1/20 Payment for copyright (5-year life) 246,000 9/1/20 Research and development costs 342,500 $2,428,500 Instructions Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2020, recording any necessary amortization and reflecting all balances accurately as of that date. (Use straight-line amortization.)
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