Redlands Inc. made the following investments on January 1, 2020, its first year of business: Item Cost Expected Life Cost Allocation Warehouse $100 20 years Straight-line Machine 60 10 years Double-declining Patent 20 5 years Straight-line Invest in stock* 10 Indefinite Not applicable * Rancho's stock had a fair (market) values of $8 and $7 on December 31, 2020 and December 31, 2021, respectively. 3. Compute 2021 amortization expense for the patent if Redlands determined the patent only had two more years of useful life on January 1, 2021. 4. Report the book values of the long-term assets on the December 31, 2021 balance sheet.
Redlands Inc. made the following investments on January 1, 2020, its first year of business: Item Cost Expected Life Cost Allocation Warehouse $100 20 years Straight-line Machine 60 10 years Double-declining Patent 20 5 years Straight-line Invest in stock* 10 Indefinite Not applicable * Rancho's stock had a fair (market) values of $8 and $7 on December 31, 2020 and December 31, 2021, respectively. 3. Compute 2021 amortization expense for the patent if Redlands determined the patent only had two more years of useful life on January 1, 2021. 4. Report the book values of the long-term assets on the December 31, 2021 balance sheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Redlands Inc. made the following investments on January 1, 2020, its first year of business:
Item
Cost
Expected Life
Cost Allocation
Warehouse $100
20 years
Straight-line
Machine
60
10 years
Double-declining
Patent
20
5 years
Straight-line
Invest in stock*
10
Indefinite
Not applicable
* Rancho's stock had a fair (market) values of $8 and $7 on December 31, 2020 and December 31,
2021, respectively.
3. Compute 2021 amortization expense for the patent if Redlands determined the patent only had
two more years of useful life on January 1, 2021.
4. Report the book values of the long-term assets on the December 31, 2021 balance sheet.
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