using information below how can I prepere Bringle company income statement effects for year end December 31, 2019? We have the following information: A patent was purchased from Lou Company for $1,845,000 on January 1, 2018. Bringle estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of $1,635,000 when Lou sold it to Bringle. During 2019, a franchise was purchased from Rink Company for $470,000. In addition, 6% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,000,000. Bringle estimates the useful life of the franchise to be 5 years and takes a full year's amortization in the year of purchase On January 1, 2019, Bringle estimates, based on new events, that the remaining life of the patent purchased on January 1, 2018, is only 10 years from January 1, 2019 Step 2 Schedule showing the intangibles section of Bringle's balance sheet at December 31, 2019 Working Notes Patent Net Value Amortization for 2018 Cost of Patent - Amortization for 2018 = $1,845,000 - ($1,845,000 /15) = $1,845,000 - $123,000 = $1,772,000 Amortization for 2019 Patent Value as on 1st Jan 2019 - Amortization for 2019 = $1,722,000 - ($1,722,000 /10) [remaining life changed to 10 years as mentioned in the question] = $1,722,00 - $172,200 = $1,549,800 Net Patent Value = $1,549,800 Net Franchise from Rink Company = Cost of Franchise - Amortization = $470,000 - ($470,000 / 5) = $470,000 - $94,000 = $376,000
using information below how can I prepere Bringle company income statement effects for year end December 31, 2019? We have the following information: A patent was purchased from Lou Company for $1,845,000 on January 1, 2018. Bringle estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of $1,635,000 when Lou sold it to Bringle. During 2019, a franchise was purchased from Rink Company for $470,000. In addition, 6% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,000,000. Bringle estimates the useful life of the franchise to be 5 years and takes a full year's amortization in the year of purchase On January 1, 2019, Bringle estimates, based on new events, that the remaining life of the patent purchased on January 1, 2018, is only 10 years from January 1, 2019 Step 2 Schedule showing the intangibles section of Bringle's balance sheet at December 31, 2019 Working Notes Patent Net Value Amortization for 2018 Cost of Patent - Amortization for 2018 = $1,845,000 - ($1,845,000 /15) = $1,845,000 - $123,000 = $1,772,000 Amortization for 2019 Patent Value as on 1st Jan 2019 - Amortization for 2019 = $1,722,000 - ($1,722,000 /10) [remaining life changed to 10 years as mentioned in the question] = $1,722,00 - $172,200 = $1,549,800 Net Patent Value = $1,549,800 Net Franchise from Rink Company = Cost of Franchise - Amortization = $470,000 - ($470,000 / 5) = $470,000 - $94,000 = $376,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
using information below how can I prepere Bringle company income statement effects for year end December 31, 2019?
We have the following information:
- A patent was purchased from Lou Company for $1,845,000 on January 1, 2018. Bringle estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of $1,635,000 when Lou sold it to Bringle.
- During 2019, a franchise was purchased from Rink Company for $470,000. In addition, 6% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,000,000. Bringle estimates the useful life of the franchise to be 5 years and takes a full year's amortization in the year of purchase
- On January 1, 2019, Bringle estimates, based on new events, that the remaining life of the patent purchased on January 1, 2018, is only 10 years from January 1, 2019
Step 2
Schedule showing the intangibles section of Bringle's
Working Notes
- Patent Net Value
Amortization for 2018
Cost of Patent - Amortization for 2018
= $1,845,000 - ($1,845,000 /15)
= $1,845,000 - $123,000
= $1,772,000
Amortization for 2019
Patent Value as on 1st Jan 2019 - Amortization for 2019
= $1,722,000 - ($1,722,000 /10) [remaining life changed to 10 years as mentioned in the question]
= $1,722,00 - $172,200 = $1,549,800
Net Patent Value = $1,549,800
- Net Franchise from Rink Company
= Cost of Franchise - Amortization
= $470,000 - ($470,000 / 5)
= $470,000 - $94,000
= $376,000
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