On January 15, 2018, a corporation was granted a patent on a product. On January 2, 2020, to protect its patent, the corporation purchased a patent on a competing product that originally was issued on January 10, 2016. Because of its unique plant, the corporation does not feel the competing patent can be used in producing a product. The cost of the competing patent should be Amortized over a maximum period of 17 years Amortized over a maximum period of 13 years Amortized over a maximum period of 9 years Expensed in 2020

On January 15, 2018, a corporation was granted a patent on a product. On January 2, 2020, to protect its patent, the corporation purchased a patent on a competing product that originally was issued on January 10, 2016. Because of its unique plant, the corporation does not feel the competing patent can be used in producing a product. The cost of the competing patent should be Amortized over a maximum period of 17 years Amortized over a maximum period of 13 years Amortized over a maximum period of 9 years Expensed in 2020

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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The Commonwealth of Virginia filed suit in October 2022 against Northern Timber Corporation, seeking civil penalties and injunctive relief for violations of environmental laws regulating forest conservation. When the financial statements were issued in 2023, Northern had not reached a settlement with state authorities, but legal counsel advised Northern Timber that it was probable the ultimate settlement would be $1,100,000 in penalties. The following entry was recorded: General Journal Debit Credit Loss-litigation 1, 100, 000 Liability-litigation 1, 100, 000 Late in 2024, a settlement was reached with state authorities to pay a total of $680,000 to cover the cost of violations. Required: Prepare any journal entry(s) related to the change. Is Northern required to revise prior years' financial statements as a result of the change? Is Northern required to provide a disclosure note to report the change?
On December 31, 2024, the end of the fiscal year, California Microtech Corporation held its semiconductor business for sale at year-end. The estimated fair value of the segment’s assets, less costs to sell, on December 31 was $13 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. Consider the following additional information: The book value of the assets of the segment at the time of the sale was $16 million. The loss from operations of the segment during 2024 was $4.4 million. Pretax income from other continuing operations for the year totaled $7.6 million. The income tax rate is 25%. Prepare the lower portion of the 2024 income statement beginning with income from continuing operations before income taxes. Note: Loss amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions. For example, $4,000,000 rather than $4.
Hills Company’s reported a land at cost of $960,000 in 2019. In 2020, the land has a fair market value of $1,600,000. The company decided to sell the land in order to implement its expansion plan. National Company offered to buy the land in 2020 from Hills at a price of $1,570,000. Hills is not sure whether it is beneficial to sell the land in year 2020 or sell it in the following year. The company’s marginal tax rate in year 2020 is 30% and 35% in year 2021. You were invited as a tax consultant to provide your opinion on the best timing for the company to sell the land. Explain your answer by providing calculations and reasons for your opinion.
In May 2021, Cruiser Company filed suit against Stallman, Inc. seeking P850,000 damages for patent infringement. A court verdict in November 2021 awarded Cruiser P600,000 in damages, but Stallman's appeal is not expected to be decided before 2021. Cruiser's counsel believes it is probable but not virtually certain that Cruiser will be successful against Stallman for an estimated amount in the range between P300,000 and P450,000, with P400,000 considered the most likely amount. What amount should Cruiser record as a contingent asset from lawsuit in the year ended December 31, 2021? None 300,000 400,000 600,000
acc
2. JPIA Company spent P1, 920, 000 in acquiring a patent on January 3, 2016. Due to the competitive nature of the product, the patent was estimated to have a useful life of 10 years. At the beginning of 2018, the company paid P240, 000 for legal fees in a successful defense of the patent. On July 1, 2022, a competitor obtained rights to a patent which made JPIA's patent obsolete. How much is the loss from the patent obsolescence?
2. Tartabull bought a franchise from Alexander Co. on January 1, 2019, for $900,000. The carrying amount of the franchise on Alexander's books on January 1, 2019, was $600,000. The franchise agreement had an estimated useful life of 20 years. Because Tartabull must enter a competitive bidding at the end of 2028, it is unlikely that the franchise will be retained beyond 2028. What amount should be amortized for the year ended December 31, 2020? The amount to be amortized SA $ 701250
Sam Ltd owns a piece of vacant land in Broadmeadows. A substantial number of factory owners establish their manufacturing plant in this location due to its accessibility and high affordability. The management of Sam Ltd wants to adopt fair value model to measure the land on 30 June 2021. Which of the following information is most useful in assisting management in estimating the fair value of the land? Group of answer choices Sam Ltd intends to lease out the land in the next financial year, and they believe they could receive an annual lease payment of $50,000. A factory owner purchased a piece of vacant land near Broadmeadows for $1m to build a new factory plant on 21 May 2021. The cost to build a new factory on a piece land in Broadmeadows is about $200,000. A landowner sold a piece of vacant land in Southbank to a property developer for $1.05m on 21 May 2021.
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
Dragon Fruit Trading spent P1,440,000 in acquiring a patent on January 3, 2012. Due to the competitive nature of the product, the patent was estimated to have a useful life of 10 years. At the beginning of 2016, the company paid P180,000 for legal fees in a successful defense of the patent. On July 1, 2020, a competitor obtained rights to a patent which made Dragon Fruit’s patent obsolete. How much is the loss from the patent obsolescence? * P216,000 P243,000 P261,000 P396,000 answer not given
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The airport land rights were given to XYZ Airlines on June. 30, 2021. On that date, the rights were valued at P15,000,000. The agreement gives the entity 30 years over those rights. The entity incurred equipment rearrangement costs as result of these rights. As of Dec. 31, 2021, the fair value of the rights significantly declined to P7,000,000 but XYZ sees an acceptable level of profits in the upcoming years. If the asset was recorded at fair value, how much is the carrying value of the airport land rights as of December 31, 2021?