Show Me How Intangibles: Balance Sheet Presentation and Income Statement Effects Han Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,395,000 on January 1, 2018. Han estimated the remaining useful life of the patent to be 10 years. The patent was carried in Lou's accounting records at a net book value of $1,065,000 when Lou sold it to Han. During 2019, a franchise was purchased from Rink Company for $330,000. In addition, 4% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,300,000. Han estimates the useful life of the franchise to be 5 years and takes a full year's amortization in the year of purchase. Han incurred R&D costs in 2019 as follows: Materials and equipment $136,000 Personnel 175,000 Indirect costs 53,000 $364,000 Han estimates that these costs will be recouped by December 31, 2020. On January 1, 2019, Han estimates, based on new events, that the remaining life of the patent purchased on January 1, 2018, is only 5 years from January 1, 2019. Required: 1. Prepare a schedule showing the intangibles section of Han's balance sheet at December 31, 2019. Han CompanyIntangible Assets Section of Balance SheetDecember 31, 2019 Patent, net (Schedule 1) $fill in the blank 5c0cce0a4fe5ff9_1 Franchise from Rink Company, net (Schedule 2) fill in the blank 5c0cce0a4fe5ff9_2 Intangible assets $fill in the blank 5c0cce0a4fe5ff9_3 Schedule 1: Computation of Patent from Lou Company Cost of patent at date of purchase $fill in the blank 5c0cce0a4fe5ff9_4 Amortization of patent for 2018 fill in the blank 5c0cce0a4fe5ff9_5 $fill in the blank 5c0cce0a4fe5ff9_6 Amortization of patent for 2019 fill in the blank 5c0cce0a4fe5ff9_7 Patent balance $fill in the blank 5c0cce0a4fe5ff9_8 Schedule 2: Computation of Franchise from Rink Company Cost of franchise at date of purchase $fill in the blank 5c0cce0a4fe5ff9_9 Amortization of franchise for 2019 fill in the blank 5c0cce0a4fe5ff9_10 Franchise balance $fill in the blank 5c0cce0a4fe5ff9_11 2. Prepare a schedule showing the income statement effects for the year ended December 31, 2019, as a result of the previously mentioned facts. Han CompanyIncome Statement EffectsFor the Year Ended December 31, 2019 Patent from Lou Company: $- Select - Franchise from Rink Company: $- Select - - Select - - Select - - Select - Total expenses $fill in the blank 8f548cfbe06d025_10

Show Me How Intangibles: Balance Sheet Presentation and Income Statement Effects Han Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,395,000 on January 1, 2018. Han estimated the remaining useful life of the patent to be 10 years. The patent was carried in Lou's accounting records at a net book value of $1,065,000 when Lou sold it to Han. During 2019, a franchise was purchased from Rink Company for $330,000. In addition, 4% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,300,000. Han estimates the useful life of the franchise to be 5 years and takes a full year's amortization in the year of purchase. Han incurred R&D costs in 2019 as follows: Materials and equipment $136,000 Personnel 175,000 Indirect costs 53,000 $364,000 Han estimates that these costs will be recouped by December 31, 2020. On January 1, 2019, Han estimates, based on new events, that the remaining life of the patent purchased on January 1, 2018, is only 5 years from January 1, 2019. Required: 1. Prepare a schedule showing the intangibles section of Han's balance sheet at December 31, 2019. Han CompanyIntangible Assets Section of Balance SheetDecember 31, 2019 Patent, net (Schedule 1) $fill in the blank 5c0cce0a4fe5ff9_1 Franchise from Rink Company, net (Schedule 2) fill in the blank 5c0cce0a4fe5ff9_2 Intangible assets $fill in the blank 5c0cce0a4fe5ff9_3 Schedule 1: Computation of Patent from Lou Company Cost of patent at date of purchase $fill in the blank 5c0cce0a4fe5ff9_4 Amortization of patent for 2018 fill in the blank 5c0cce0a4fe5ff9_5 $fill in the blank 5c0cce0a4fe5ff9_6 Amortization of patent for 2019 fill in the blank 5c0cce0a4fe5ff9_7 Patent balance $fill in the blank 5c0cce0a4fe5ff9_8 Schedule 2: Computation of Franchise from Rink Company Cost of franchise at date of purchase $fill in the blank 5c0cce0a4fe5ff9_9 Amortization of franchise for 2019 fill in the blank 5c0cce0a4fe5ff9_10 Franchise balance $fill in the blank 5c0cce0a4fe5ff9_11 2. Prepare a schedule showing the income statement effects for the year ended December 31, 2019, as a result of the previously mentioned facts. Han CompanyIncome Statement EffectsFor the Year Ended December 31, 2019 Patent from Lou Company: $- Select - Franchise from Rink Company: $- Select - - Select - - Select - - Select - Total expenses $fill in the blank 8f548cfbe06d025_10

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Intangibles: Balance Sheet Presentation and Income Statement Effects

Han Company has provided information on intangible assets as follows:

A patent was purchased from Lou Company for $1,395,000 on January 1, 2018. Han estimated the remaining useful life of the patent to be 10 years. The patent was carried in Lou's accounting records at a net book value of $1,065,000 when Lou sold it to Han.
During 2019, a franchise was purchased from Rink Company for $330,000. In addition, 4% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,300,000. Han estimates the useful life of the franchise to be 5 years and takes a full year's amortization in the year of purchase.
Han incurred R&D costs in 2019 as follows:

Materials and equipment $136,000

Personnel 175,000

Indirect costs 53,000

$364,000

Han estimates that these costs will be recouped by December 31, 2020.
On January 1, 2019, Han estimates, based on new events, that the remaining life of the patent purchased on January 1, 2018, is only 5 years from January 1, 2019.

Required:

1. Prepare a schedule showing the intangibles section of Han's balance sheet at December 31, 2019.

Han CompanyIntangible Assets Section of Balance SheetDecember 31, 2019

Patent, net (Schedule 1)	$fill in the blank 5c0cce0a4fe5ff9_1
Franchise from Rink Company, net (Schedule 2)	fill in the blank 5c0cce0a4fe5ff9_2
Intangible assets	$fill in the blank 5c0cce0a4fe5ff9_3

Schedule 1: Computation of Patent from Lou Company

Cost of patent at date of purchase	$fill in the blank 5c0cce0a4fe5ff9_4
Amortization of patent for 2018	fill in the blank 5c0cce0a4fe5ff9_5
	$fill in the blank 5c0cce0a4fe5ff9_6
Amortization of patent for 2019	fill in the blank 5c0cce0a4fe5ff9_7
Patent balance	$fill in the blank 5c0cce0a4fe5ff9_8

Schedule 2: Computation of Franchise from Rink Company

Cost of franchise at date of purchase	$fill in the blank 5c0cce0a4fe5ff9_9
Amortization of franchise for 2019	fill in the blank 5c0cce0a4fe5ff9_10
Franchise balance	$fill in the blank 5c0cce0a4fe5ff9_11

2. Prepare a schedule showing the income statement effects for the year ended December 31, 2019, as a result of the previously mentioned facts.

Han CompanyIncome Statement EffectsFor the Year Ended December 31, 2019

Patent from Lou Company:
		$- Select -
Franchise from Rink Company:
	$- Select -
	- Select -	- Select -
		- Select -
Total expenses		$fill in the blank 8f548cfbe06d025_10

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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Materials and equipment	$136,000
Personnel	175,000
Indirect costs	53,000
	$364,000