On January 1, 2024, Weaver Corporation purchased a patent for $255,000. The remaining legal life is 20 years, but the company estimates the patent will be useful for only six more years. In January 2026, the company incurred legal fees of $75,000 in successfully defending a patent infringement suit. The successful defense did not change the company's estimate of useful life. Weaver Corporation's year-end is December 31. Required: 1. Record the purchase in 2024; amortization in 2024; amortization in 2025; legal fees in 2026; and amortization in 2026. 2. What is the balance in the Patent account at the end of 2026? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Record the purchase in 2024; amortization in 2024; amortization in 2025; legal fees in 2026; and amortization in 2026. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list

On January 1, 2024, Weaver Corporation purchased a patent for $255,000. The remaining legal life is 20 years, but the company estimates the patent will be useful for only six more years. In January 2026, the company incurred legal fees of $75,000 in successfully defending a patent infringement suit. The successful defense did not change the company's estimate of useful life. Weaver Corporation's year-end is December 31. Required: 1. Record the purchase in 2024; amortization in 2024; amortization in 2025; legal fees in 2026; and amortization in 2026. 2. What is the balance in the Patent account at the end of 2026? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Record the purchase in 2024; amortization in 2024; amortization in 2025; legal fees in 2026; and amortization in 2026. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list

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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Ayayai Corporation purchases a patent from Blossom Company on January 1, 2025, for $63,000. The patent has a remaining legal life of 14 years. Ayayai estimates the patent will have a useful life of 10 years, based on expected product innovations in the market. Prepare Ayayai's journal entries to record the purchase of the patent and 2025 amortization. (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 o for the amounts. List all debit entries before credit entries.) Account Titles and Explanation (To record purchase of patents) (To record amortization of patents) Debit Credit
The Western Company, a company that follows IFRS, provided you with the following information about a number of transactions that took place in 2020: 1) On January 1, 2020 Western acquired a patent for $45,000 cash. The patent expires on January 1, 2028, but the company determined that it will generate future benefits for 6 years from the date of acquisition. During 2022, the total useful life of the patent was revised to 4 years. 2) During March 2020, The Wester Company invested $120,000 in research costs about a new product that it aims to develop in 2021. The amount was paid in cash. 3) The Western Company estimates that its internal goodwill is worth $980,000 in July 2020. Required- a) Prepare the journal entries related to the patent from January 1, 2020 to December 31, 2022. b) Prepare the journal entries for 2 and 3. If no journal entry is required, justify why.
Sandhill Inc. purchased a patent on January 1, 2023 for $500000. Sandhill did not record amortization expense on the patent for 2023 and 2024. At the purchase date, the expected useful life of the patent was 10 years. At December 31, 2025, what should be recorded as the amortization expense? $0 because the value of the patent has not decreased $100000 O $50000 O $150000
In January 2021, Blossom Corporation purchased a patent for a new consumer product for $558900. At the time of purchase, the patent was valid for fifteen years. Due to the competitive nature of the product, however, the patent was estimated to have a useful life of only ten years. In 2026 the product was determined to be obsolete due to a competitor's new product. What amount should Blossom report on the income statement during 2026 related to the patent, assuming straight-line amortization is recorded at the company's December 31 year-end? $35890 O $279450 O $578900 O $179450
Jolis Company has provided information on the following items: 1. A patent was purchased from Totley Company for $600,000 on January 1, 2018. At that time, Jolis estimated the remaining useful life to be 10 years. The patent was carried on Totley’s books at $20,000 when it sold the patent. 2. On March 2, 2019, a franchise was purchased from Unal Company for $240,000. In addition, 8% of the revenue from the franchise must be paid to Unal. Revenue earned during 2019 was $650,000. Jolis believes that the life of the franchise is indefinite and that the franchise is not impaired at the end of 2019. 3. R&D costs were incurred as follows: (a) materials and equipment, $60,000; (b) personnel, $80,000; and (c) indirect costs, $40,000. The costs were incurred to develop a product that will go on sale in 2020 and will have an expected life of 5 years. 4. A trade name had been purchased for a sugar substitute at the beginning of 2015 for $81,000. In January 2019, it was suspected…
On January 2, 2023, Blossom Corp. bought a trademark from Cullumber Inc. for $117000. An independent research company estimated that the remaining useful life of the trademark was 25 years. At this time, the trademark's net book value in Cullumber's records was $174000. Because the trademark had a demonstrated limited life beyond 25 years, Blossom decided to amortize the trademark over the maximum period, straight-line with no residual. In Blossom's (calendar) 2023 income statement, what amount should be reported as amortization expense for this trademark? O $6492 O $6960 O $4680 O $5850
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Culver Products Ltd. purchased a patent on January 1, 2020, for $840,000. At the time of the purchase, the patent had a remaining legal life of 15 years. In January, 2023, Culver spent $372,000 successfully defending the patent in court. One of the other results of the court case was the discovery that the patent would only have a remaining useful life of 9 years. Culver's year-end was December 31. Prepare the entries on the books of Culver Ltd. to record (a) the purchase of the patent, (b) amortization for the first year (2020), (c) the defense of the patent, and (d) amortization for 2023. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275. List all debit entries before credit entries.) No. Account Titles and Explanation (a) (b) (c) (d) Debit Credit
On April 1, 2020, the Tech Corp. acquired a patent for $162,000. This patent has an estimated useful life of 12 years with an estimated residual value of $18,000. Required: a. In determining the 12-year useful life of this patent, what two lives of the patent did Tech consider? b. Which of these two lives did Tech use as the patent's useful life or is that determinable? c. Make the December 31, 2020, entry for Tech to record the 2020 amortization of this patent in the manner that Tech would have to use in this class. d. What will be the book value of this patent on the December 31, 2023, balance sheet? 14 010 120m 20 1
Presented below is selected information for Sandhill Company. Answer the questions asked about each of the factual situations. (Do not leave any answer field blank. Enter O for amounts.) (a) On January 1, 2017, Sandhill incurred organization costs of $265,000. What amount of organization expense should be reported in 2017? Amount to be reported $ (b) Sandhill bought a franchise from Carla Vista Co. on January 1, 2016, for $190,000. The carrying amount of the franchise on Carla Vista's books on January 1, 2016, was $238,00O. The franchise agreement had an estimated useful life of 10 years. Because Sandhill must enter a competitive bidding at the end of 2018, it is unlikely that the franchise will be retained beyond 2025. What amount should be amortized for the year ended December 31, 2017? Amount to be amortized $ %24
Carla Vista Company purchases a patent for $147,200 cash on January 2, 2021. Its legal life is 20 years and its estimated useful life is 8 years. Record the purchase of the patent on January 2, 2021.
1. A patent was acquired from another company on January 1, 2019, for $25,000.The useful life is 10 years. 2. On April 2, 2019, the company was successful in obtaining a patent. The legal fees paid to an outside law firm were $8,400. The development costs paid to engineers who were employees of Bishop were $75,000. The useful life is 10 years. 3. On July 1, 2019, Bishop acquired all the assets net of the liabilities of Fargo Company. The identifiable net assets' market values at the time of purchase totaled $100,000. Bishop acknowledged the superior earnings and loyal customer following of Fargo Company. Therefore, Bishop and Fargo agreed on a total purchase price of $145,000. Any goodwill arising from the purchase is not to be amortized. 4. On December 31, 2019, Bishop paid a consulting firm $17,000 to develop a trademark. In addition, legal fees paid in connection with the trademark were $3,000. Assume a useful life of 20 years. 5. On August 1, 2019, Bishop acquired intangible asset…