Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Please explain this financial accounting problem with accurate financial standards.
Hindenburger, Inc., began operations on January 1. It made 5,000
burgers and sold 4,000 of them. Hindenburger incurred the following
costs:
Raw materials
$1,000
Wagos of production workers
7,000
Rent for corporate headquarters
5,000
Depreciation on manufacturing equipment
2,000
Commissions paid to sales people
4,000
Calculate the total product cost for the year ended December 31.
Horizon Innovations incurred $120,000 in research
and development costs and $60,000 in legal fees to
acquire a patent. The patent has a legal life of 20
years and a useful life of 8 years.
What amount should Horizon record as Patent
Amortization Expense in the first year?
a. $7,500
b. $15.000
c. $22,500
d. $0
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