Financial Accounting
9th Edition
ISBN: 9781259738692
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 8.10P
1.
To determine
Compute the amount of amortization that should be recorded for each intangible asset at the end of the annual accounting period, December 31, 2017.
2.
To determine
Give the book value of each intangible asset on December 31, 2018.
3.
To determine
Compute the amount of impairment loss to be recorded on January 2, 2019.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
how How can due entries?
Intangibles: Balance Sheet Presentation and Income Statement Effects
Bringle Company has provided information on intangible assets as follows:
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.
Bringle incurred R&D costs in 2019 as follows:
Materials and equipment
$150,000
Personnel
130,000
Indirect costs
69,000
$349,000
Bringle estimates that these costs will be recouped by December 31, 2020.
On January 1, 2019,…
Dengar
The intangible assets section of Pina Corporation’s balance sheet at December 31, 2022, is presented here.
Patents ($73,300 cost less $6,900 amortization)
$66,400
Copyrights ($57,000 cost less $46,700 amortization)
10,300
Total
$76,700
The patent was acquired in January 2022 and has a useful life of 10 years. The copyright was acquired in January 2016 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2023.
Jan.
2
Paid $54,000 legal costs to successfully defend the patent against infringement by another company.
Jan.–
June
Developed a new product, incurring $241,500 in research and development costs. A patent was granted for the product on July 1, and its useful life is equal to its legal life. Legal and other costs for the patent were $20,000.
Sept.
1
Paid $68,000 to a quarterback to appear in commercials advertising the company’s products. The commercials will air in September and…
Chapter 8 Solutions
Financial Accounting
Ch. 8 - Define long-lived assets. Why are they considered...Ch. 8 - Prob. 2QCh. 8 - What are the classifications of long-lived assets?...Ch. 8 - Prob. 4QCh. 8 - Describe the relationship between the expense...Ch. 8 - Prob. 6QCh. 8 - Prob. 7QCh. 8 - In computing depreciation, three values must be...Ch. 8 - The estimated useful life and residual value of a...Ch. 8 - Prob. 10Q
Ch. 8 - Prob. 11QCh. 8 - Prob. 12QCh. 8 - Prob. 13QCh. 8 - Prob. 14QCh. 8 - Prob. 15QCh. 8 - Why is depreciation expense added to net income...Ch. 8 - Miga Company and Porter Company both bought a new...Ch. 8 - Leslie, Inc.. followed the practice of...Ch. 8 - Prob. 3MCQCh. 8 - Prob. 4MCQCh. 8 - Prob. 5MCQCh. 8 - Prob. 6MCQCh. 8 - Prob. 7MCQCh. 8 - Prob. 8MCQCh. 8 - Prob. 9MCQCh. 8 - (Chapter Supplement) Irish Industries purchased a...Ch. 8 - Prob. 8.1MECh. 8 - Prob. 8.2MECh. 8 - Prob. 8.3MECh. 8 - Prob. 8.4MECh. 8 - Computing Book Value (Double-Declining-Balance...Ch. 8 - Computing Book Value (Units-of-Production...Ch. 8 - Identifying Asset Impairment LO8-4 For each of the...Ch. 8 - Prob. 8.8MECh. 8 - Prob. 8.9MECh. 8 - Prob. 8.10MECh. 8 - Prob. 8.1ECh. 8 - Prob. 8.2ECh. 8 - Computing and Recording Cost and Depreciation of...Ch. 8 - Determining Financial Statement Effects of an...Ch. 8 - Determining Financial Statement Effects of an...Ch. 8 - Recording Depreciation and Repairs (Straight-Line...Ch. 8 - Prob. 8.7ECh. 8 - Prob. 8.8ECh. 8 - Computing Depreciation under Alternative Methods...Ch. 8 - Computing Depreciation under Alternative Methods...Ch. 8 - Prob. 8.11ECh. 8 - Prob. 8.12ECh. 8 - Prob. 8.13ECh. 8 - Computing Depreciation and Book Value for Two...Ch. 8 - Prob. 8.15ECh. 8 - Recording the Disposal of an Asset at Three...Ch. 8 - Prob. 8.17ECh. 8 - Prob. 8.18ECh. 8 - Prob. 8.19ECh. 8 - Prob. 8.20ECh. 8 - Prob. 8.21ECh. 8 - Prob. 8.22ECh. 8 - (Chapter Supplement) Recording a Change in...Ch. 8 - Prob. 8.24ECh. 8 - Prob. 8.25ECh. 8 - Explaining the Nature of a Long-Lived Asset and...Ch. 8 - Analyzing the Effects of Repairs, an Addition, and...Ch. 8 - Prob. 8.3PCh. 8 - Best Buy Co., Inc., headquartered in Richfield,...Ch. 8 - Evaluating the Effect of Alternative Depreciation...Ch. 8 - Recording and Interpreting the Disposal of Three...Ch. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Computing Goodwill from the Purchase of a Business...Ch. 8 - Prob. 8.10PCh. 8 - Prob. 8.11PCh. 8 - Explaining the Nature of a Long-Lived Asset and...Ch. 8 - Prob. 8.2APCh. 8 - Computing the Acquisition Cost and Recording...Ch. 8 - Prob. 8.4APCh. 8 - Recording and Interpreting the Disposal of Three...Ch. 8 - Prob. 8.6APCh. 8 - Prob. 8.7APCh. 8 - Asset Acquisition, Depreciation, and Disposal Pool...Ch. 8 - Case A. Dr Pepper Snapple Croup, Inc., is a...Ch. 8 - Prob. 8.1BCOMPCh. 8 - Prob. 8.1CCOMPCh. 8 - Case D. Stewart Company reports the following...Ch. 8 - Case E. Matson Company purchased the following on...Ch. 8 - Prob. 8.1CPCh. 8 - Finding Financial Information LO8-1, 8-2, 8-6...Ch. 8 - Comparing Companies within an Industry Refer to...Ch. 8 - Prob. 8.4CPCh. 8 - Prob. 8.5CPCh. 8 - Prob. 8.6CPCh. 8 - Evaluating the Impact of Capitalized Interest on...
Knowledge Booster
Similar questions
- Intangibles: Balance Sheet Presentation and Income Statement Effects Valen Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,215,000 on January 1, 2018. Valen 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 $955,000 when Lou sold it to Valen. During 2019, a franchise was purchased from Rink Company for $430,000. In addition, 4% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,100,000. Valen estimates the useful life of the franchise to be 10 years and takes a full year's amortization in the year of purchase. Valen incurred R&D costs in 2019 as follows: Materials and equipment $108,000 Personnel 133,000 Indirect costs 78,000 $319,000 Valen estimates that these costs will be recouped by December 31, 2020. On January 1, 2019, Valen estimates, based on new events, that the…arrow_forwardSheridan Company has provided information on intangible assets as follows. • Sheridan incurred research and development costs in 2017 as follows. Materials and equipment $166,000 Personnel 284,000 Indirect costs 21,400 $471,400 Sheridan estimates that these costs will be recouped by December 31, 2020. The materials and equipment purchased have no alternative uses. • A patent was purchased from Crane Company for $1,090,000 on January 1, 2016. Sheridan estimated the remaining useful life of the patent to be 10 years. The patent was carried in Crane's accounting records at a net book value of $2,250,000 when Crane sold it to Sheridan. • During 2017, a franchise was purchased from Clinton Company for $355,000. In addition, 5% of revenue from the franchise must be paid to Clinton. Revenue from the franchise for 2017 was $1,300,000. Sheridan estimates the useful life of the franchise to be 1O years and takes a full year's amortization in the year of purchase. • On January 1, 2017, because of…arrow_forwardGadubhiarrow_forward
- Barb Company has provided information on intangible assets as follows:1. A patent was purchased from Lou Company for $1,500,000 on January 1, 2018. Barb 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 $1,250,000 when Lou sold it to Barb.2. During 2019, a franchise was purchased from Rink Company for $500,000. In addition, 5% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,000,000. Barb estimates the useful life of the franchise to be 10 years and takes a full year’samortization in the year of purchase.3. Barb incurred R&D costs in 2019 as follows.arrow_forwardBramble Company, organized in 2020, has the following transactions related to intangible assets. 1/2/20 Purchased patent (6-year life) $474,000 4/1/20 Goodwill purchased (indefinite life) 360,000 7/1/20 14-year franchise 588,000 9/1/20 Research and development costs 166,000 (a1) Prepare the necessary entries to record these intangibles. All costs incurred were for cash. Make the adjusting entries as of December 31, 2020, recording any necessary amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) date Account title and explanation debit CREDITarrow_forwardInformation concerning Taylor Corporation’s intangible assets follows: 1. Taylor incurred $70,000 of experimental and development costs in its laboratory to develop a patent which was granted on January 2, 2025. Legal fees associated with the registration of the patent totaled $20,000. Taylor estimates that the useful life of the patent will be 10 years; the legal life of the patent is 20 years. The company uses the straight-line method of amortization for this asset. 2. On January 1, 2025, Taylor signed an agreement to operate as a franchisee of Dairy King, Inc. for an initial franchise fee of $150,000. The agreement provides that the fee is not refundable and no future services are required of the franchisor. Taylor estimates the useful life of the franchise to be 15 years and uses the straight-line method of amortization. 3. A trade name was purchased from Stine Company for $80,000 on May 1, 2023. Expenditures for successful litigation in defense of the trade name totaling…arrow_forward
- Barb Company has provided information on intangible assets as follows:1. A patent was purchased from Lou Company for $1,500,000 on January1, 2018. Barb estimated the remaining useful life of the patent to be 10years. The patent was carried in Lou's accounting records at a net bookvalue of $1,250,000 when Lou sold it to Barb. 2. During 2019, a franchise was purchased from Rink Company for$500,000. In addition, 5% of revenue from the franchise must be paid toRink. Revenue from the franchise for 2019 was $2,000,000. Barbestimates the useful life of the franchise to be 10 years and takes a fullyear's amortization in the year of purchase. 3. Barb incurred R&D costs in 2019 as follows. Materials and equipmentPersonnelIndirect costs $120,000140,00060,000 $320,000 Barb estimates that these costs will be recouped by December 31, 2020. 4. On January 1, 2019, Barb estimates, based on new events, that theremaining life of the patent purchased on January 1, 2018, is only 5 yearsfrom…arrow_forwardPharoah Company, organized in 2022, has the following transactions related to intangible assets. 1/2/22 Purchased patent (7-year life) $605,500 4/1/22 Goodwill purchased (indefinite life) 360,000 7/1/22 Acquired 10-year franchise; expiration date 7/1/2032 600,000 9/1/22 Incurred research and development costs 182,000 (a1) Prepare the necessary entries to record these transactions. All costs incurred were for cash. Make the adjusting entries as of December 31, 2022, recording any necessary amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Creditarrow_forwardIntangibles: Balance Sheet Presentation and Income Statement Effects Clinton Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,680,000 on January 1, 2018. Clinton 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 $1,440,000 when Lou sold it to Clinton. During 2019, a franchise was purchased from Rink Company for $500,000. In addition, 6% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $1,800,000. Clinton estimates the useful life of the franchise to be 10 years and takes a full year's amortization in the year of purchase. Clinton incurred R&D costs in 2019 as follows: Materials and equipment $125,000 Personnel 162,000 Indirect costs 78,000 $365,000 Clinton estimates that these costs will be recouped by December 31, 2020. On January 1, 2019, Clinton estimates, based on new…arrow_forward
- Determining Carrying Value and Amortization of Intangible Assets Review the following information pertaining to Denzel Company. A patent was purchased on January 2, 2018, for $149,500 when the remaining legal life was 16 years. On January 2, 2020, Denzel determined that the remaining useful life of the patent was only eight years from the date of its acquisition. On January 1, 2020, Denzel Company purchased a second patent for $184,000 cash. At January 1, 2020, 6 years of the patent's legal life of 20 years had already expired. On June 30, 2020, Denzel Company paid a firm $18,400 for a new trademark. Denzel considers the life of the trademark to be indefinite. On November 1, 2020, Denzel Company acquired all noncash assets and assumed all liabilities of Lee Company at a cash purchase price of $276,000. Denzel determined that the fair value of the identfiable net assets acquired in the transaction is $269,100. Note: When answering the following questions, do not round until your…arrow_forwardFor each of the following intangible assets, indicate the amount of amortization expense that should be recorded for the year 2017 and the amount of accumulated amortization on the balance sheet as of December 31, 2017. Trademark Patent Copyright Cost $35,800 $47,400 $69,200 Date of purchase 1/1/10 1/1/12 1/1/15 Useful life indefinite 10 yrs. 20 yrs. Legal life undefined 20 yrs. 50 yrs. Method SL* SL SL *Represents the straight-line method. If an amount is zero, enter "0". Amount Trademark Patent Copyright 2017 amortization expense $fill in the blank 1 0 $fill in the blank 2 5,100 $fill in the blank 3 3,780 Accumulated amortization, Dec. 31, 2017 $fill in the blank 4 0 $fill in the blank 5 30,600 $fill in the blank 6 11,340arrow_forwardREQUIRED: prepare the Balance Sheet Equation for the following: 1) On 9/1/13, Strand Corp received a copyright. Cost = $200,000. Copyright had a 7 year legal life and an estimated useful life of 5 years. 2) Calculate and record Amortization expense for the year 2013 AND 2014 3) Explain the difference between Tangible Assets and Intangible Assets 4) Provide at least 3 examples of Tangible Assets and Intangible Assetsarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning