Wildhorse Company has provided information on intangible assets as follows.A patent was purchased from Windsor Company for $1,700,000 on January 1, 2019. Wildhorse estimated the remaining useful life of the patent to be 10 years. The patent was carried in Windsor’s accounting records at a net book value of $1,700,000 when Windsor sold it to Wildhorse.During 2020, a franchise was purchased from Novak Company for $460,000. In addition, 5% of revenue from the franchise must be paid to Novak. Revenue from the franchise for 2020 was $2,530,000. Wildhorse estimates the useful life of the franchise to be 10 years and takes a full year’s amortization in the year of purchase.Wildhorse incurred research and development costs in 2020 as follows. Materials and equipment $153,000 Personnel 204,000 Indirect costs 108,000 $465,000 Wildhorse estimates that these costs will be recouped by December 31, 2023. The materials and equipment purchased have no alternative uses.On January 1, 2020, because of recent events in the field, Wildhorse estimates that the remaining life of the patent purchased on January 1, 2019, is only 5 years from January 1, 2020. Prepare the intangibles section of Wildhorse’s balance sheet at December 31, 2020. Prepare the income statement effect (related to expenses) for the year ended December 31, 2020, as a result of the facts above. (Enter account name only and do not provide descriptive information.)
Wildhorse Company has provided information on intangible assets as follows.
A patent was purchased from Windsor Company for $1,700,000 on January 1, 2019. Wildhorse estimated the remaining useful life of the patent to be 10 years. The patent was carried in Windsor’s accounting records at a net book value of $1,700,000 when Windsor sold it to Wildhorse.
During 2020, a franchise was purchased from Novak Company for $460,000. In addition, 5% of revenue from the franchise must be paid to Novak. Revenue from the franchise for 2020 was $2,530,000. Wildhorse estimates the useful life of the franchise to be 10 years and takes a full year’s amortization in the year of purchase.
Wildhorse incurred research and development costs in 2020 as follows.
| Materials and equipment |
$153,000
|
|
| Personnel |
204,000
|
|
| Indirect costs |
108,000
|
|
|
$465,000
|
Wildhorse estimates that these costs will be recouped by December 31, 2023. The materials and equipment purchased have no alternative uses.
On January 1, 2020, because of recent events in the field, Wildhorse estimates that the remaining life of the patent purchased on January 1, 2019, is only 5 years from January 1, 2020.
Prepare the intangibles section of Wildhorse’s
Prepare the income statement effect (related to expenses) for the year ended December 31, 2020, as a result of the facts above. (Enter account name only and do not provide descriptive information.)
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