4rr.(MP) manufactures printers. Assume that MP recently paid 400,000 for a patent on a new laser printer. Although it gives legal protection for 20 years, the patent is expected to provide a competitive advantage for only ten years. Requirement 1. Assuming the straight-Inc method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for the first full year. (Record debits first, then credits. Select theexplanation on the last line of the joumal entry table.)(a) Record the purchase of the patent.DataDataPatent13CrochTo record purchase of patent(b) Record the amortization for the first full year.Accounts and ExplanationAccounts and ExplanationAmortization Expense PatentPartTo record amortization of patentAccounts and ExplanationAmortization Expense-PatentPatentDebitTo recara amortization of patent400,000Debit40,000CreditRequirement 2. After using the petent for five years, MP leams at an industry trade show that another company is designing a more efficient printer. On the basis of this new information. MP decides, starting with Year6, to amortize the remaining cost of the patent over two remaining years, giving the patent a total useful te of seven years. Record amortization for Year 5. (Record debits first, then credits. Select the explanation onthe last line of the journal entry table.)DalkDebit400,000Credit40,000Credit RequirementsI2.1. Assuming the straight-line method of amortization, make journal entries torecord (a) the purchase of the patent and (b) amortization for the first full year.After using the patent for five years, MP learns at an industry trade show thatanother company is designing a more efficient printer. On the basis of thisnew information, MP decides, starting with Year 6, to amortize the remainingcost of the patent over two remaining years, giving the patent a total useful lifeof seven years. Record amortization for Year 6.

Depreciation , amortization , depletion all means the fall in value of assets due to one reason or…

Requirements 1. Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for the first full year. 2. After using the patent for five years, MP learns at an industry trade show that another company is designing a more efficient printer. On the basis of this new information, MP decides, starting with Year 6, to amortize the remaining cost of the patent over two remaining years, giving the patent a total useful life of seven years. Record amortization for Year 6.

Requirements 1. Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for the first full year. 2. After using the patent for five years, MP learns at an industry trade show that another company is designing a more efficient printer. On the basis of this new information, MP decides, starting with Year 6, to amortize the remaining cost of the patent over two remaining years, giving the patent a total useful life of seven years. Record amortization for Year 6.

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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6
Murphy Printers (MP) manufactures printers. Assume that MP recently paid $500,000 for a patent on a new laser printer. Although it gives legal protection for 20 years, the patent is expected to provide a competitive advantage for only eight years. 1. Assuming the straight -line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for the first full year.
A firm owns a drilling equipment that it is contemplating replacing. It is believed that P1,500,000 could be obtained for the old equipment if it were sold now, but it can be productively used for four more years at which time its market value will be zero. The equipment has an operating and maintenance of P600,000 per year. The firm can purchase a new machine, with the same functionality as the current machine, for P5,500,000. In four years the market value of the new machine is estimated to be P2,275,000. Annual operating and maintenance costs will be P1,850,000 per year. Should the old drilling equipment be replaced using a before-tax MARR of 15% and a study period of four years?
3. Power Coal Mine Bhd is considering a new mining pit to increase its productionoutput. The company will have to pay $25 million for the rights to mine on thegovernment land. The infrastructure development costs will amount to another $12million. It is anticipated that the mine should generate annual net revenue of $10million for 15 years. When the mine is closed at the end of the fifteenth year, $10million will be spent for reclamation work. The company’s MARR is 10%per year.a.Draw a cash flow diagram for the above proposal.b. Compute the equivalent present worth (PW) of the proposal.c. Determine the minimum annual net revenue required for the proposal tobreakeven. Assume that costs of rights to mine, development, andreclamation remain the same.
2
Hh1).
am.123.
note: can you help me answer the question for s, t and u? Lee Wah Press (LWP) is considering a leasing arrangement to finance some special printing machines that it needs for production during the next three years. A planned change in the company’s production technology will make the new machine obsolete after 3 years. LWP will depreciate the new machine on a straight-line basis towards zero salvage value. The firm can borrow the installed cost of $480,000, at 10% interest per annum, calculated on an annual reducing balance, to buy the new machine or make three equal beginning-of-year lease payments of $210,000 should it decide to take up lease financing. Annual maintenance costs associated with ownership, payable at the end of year, are estimated at $25,000. Annual insurance premium associated with the purchase is estimated to be at $6,000, payment is on a cash-before-cover basis. Should LWP opt for lease financing, all other costs will be borne by the lessor. LWP tax rate is 40%.…
am. 120.
15. A company purchases a piece of equipment for $15,000. After nine years, the salvage value is $900. The annual insurance cost is 5% of the purchase price, the electricity cost is $600/yr, and the maintenance and replacement parts cost is $120/yr. The effective annual interest rate is 10%. Neglecting taxes, what is most nearly the present worth of the equipment if it is expected to save the company $4500 per year? (A) $2300 (B) $2800 (C) $3200 (D) $3500
Julong Petro Materials, Inc. ordered $10 million worth of seamless tubes for its drill collars from the Timken Company of Canton, Ohio. (A drill collar is the heavy tubular connection between a drill pipe and a drill bit.) At 10% per year interest, what is the annual worth of the purchase over a 10-year amortization period?
Am. 113.