Connect Access Card for Financial Accounting
9th Edition
ISBN: 9781259738678
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 8, Problem 8.20E
1.
To determine
Ascertain the acquisition cost of each intangible asset.
2.
To determine
Ascertain the amortization expense of each intangible asset of Company T at December 31, 2016.
3.
To determine
Show the presentation of amortization expense on income statement and
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Recording Asset Acquisition, Depreciation, and Disposal
On January 2, 2016, Verdi Company acquired a machine for $75,000. In addition to the purchase price, Verdi spent $2,100 for shipping and installation, and $2,600 to
calibrate the machine prior to use. The company estimates that the machine has a useful life of 5 years and a residual value of $11,000.
Required
a. Prepare journal entries to record the acquisition costs.
Description
Debit
+
→
b. Calculate the annual depreciation expense using straight-line depreciation and prepare a journal entry to record depreciation expense for 2016.
Description
Credit
Cash
◆
◆
Accumulated depreciation
c. On December 31, 2019, Verdi sold the machine to another company for $14,000. Prepare the necessary journal entry to record the sale.
Credit
Description
Debit
Credit
Debit
◆
♦
Depreciation calculation methods Millco, Inc., acquired a machine that cost $1,200,000 early in 2016. The
machine is expected to last for eight years, and its estimated salvage value at the end of its life is $180,000.
Required:
a. Using straight-line depreciation, calculate the depreciation expense to be recognized in the first year of the
machine's life and calculate the accumulated depreciation after the fifth year of the machine's life.
Long-Term Assets
Saved
Kreiser Company had three intangible assets at the end of 2020 (end of the accounting year):
31
a. A patent was purchased from J. Miller on January 1, 2020, for a cash cost of $5,625. When purchased, the patent had an estimated
life of fifteen years.
b. A trademark was registered with the federal government for $21,000, Management estimated that the trademark could be worth as
much as $200,000 because it has an indefinite life.
c. On January 1, 2020, computer licensing rights were purchased for $59,600, The rights are expected to have a four-year useful life
to the company.
Dints
Required:
1. Compute the acquisition cost of each intangible asset.
еВook
Acquisition cost:
References
Patent
Trademark
Licensing rights
2. Compute the amortization of each intangible for the vear ended December 31, 2020.
Amortization expense
Patent
Trademark
Licensing rights
3. Show how these assets and any related expenses should be reported on the balance sheet and income statement…
Chapter 8 Solutions
Connect Access Card for 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
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Depreciation On July 1, 2016, Dexter Corp. buys a computer system for $260,000 in cash. Assume that the computer is expected to have a four-year life and an estimated salvage value of $20,000 at the end of that time. Required Prepare the journal entry to record the purchase of the computer on July 1, 2016. Compute the depreciable cost of the computer. Using the straight-line method, compute the monthly depreciation. Prepare the adjusting entry to record depreciation at the end of July 2016. Compute the computers carrying value that will be shown on Dexters balance sheet prepared on December 31, 2016.arrow_forwardINTANGIBLE LONG-TERM ASSETS Track Town Co. had the following transactions involving intangible assets: Jan. 1 Purchased a patent for leather soles for 10,000 and estimated its useful life to be 10 years. Apr. 1 Purchased a copyright for a design for 15,000 with a life left on the copyright of 25 years. The estimated remaining (economic) life of the copyright is five years. July 1 Signed a five-year franchise agreement and opened a Starting Line high-tech running shoe store. Paid 50,000 to the franchisor. REQUIRED 1. Using the straight-line method, calculate the amortization of the patent, copyright, and franchise. 2. Prepare general journal entries to record the end-of-year amortizations.arrow_forwardcan you please help with the highlighted questionarrow_forward
- 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,…arrow_forwardCalculate A,B,C,D and Earrow_forwardDetermining Carrying Value and Amortization of Intangible Assets Review the following information pertaining to Denzel Company. 1. A patent was purchased on January 2 of Year 1 for $104,000 when the remaining legal life was 16 years. On January 2 of Year 3, Denzel determined that the remaining useful life of the patent was only eight years from the date of its acquisition. 2. On January 1 of Year 3, Denzel Company purchased a second patent for $128,000 cash. At January 1 of Year 3, a total of 6 years of the patent's legal life of 20 years had expired. 3. On June 30 of Year 3, Denzel Company paid a firm $12,800 for a new trademark. Denzel considers the life of the trademark to be indefinite. 4. On November 1 of Year 3, Denzel Company acquired all noncash assets and assumed all liabilities of Lee Company at a cash purchase price of $192,000. Denzel determined that the fair value of the identifiable net assets acquired in the transaction is $187,200. Required a. What is the carrying value…arrow_forward
- Depreciation Methods On January 2, 2018, Skyler, Inc. purchased a laser cutting machine to be used in the fabrication of a part for one of its key products. The machine cost $120,000, and its estimated useful life was four years or 920,000 cuttings, after which it could be sold for $5,000. Required a. Calculate each year’s depreciation expense for the machine's useful life under each of the following depreciation methods (round all answers to the nearest dollar):1. Straight-line.2. Double-declining balance.3. Units-of-production. (Assume annual production in cuttings of 200,000; 350,000; 260,000; and 110,000.) 1. Straight-Line Year DepreciationExpense 2018 Answer 2019 Answer 2020 Answer 2021 Answer 2. Double-declining balance Year DepreciationExpense 2018 Answer 2019 Answer 2020 Answer 2021 Answer 2022 Answer 3. Units of Production Year DepreciationExpense 2018 Answer 2019 Answer 2020 Answer…arrow_forwardDengararrow_forwardDepreciation Methods Gruman Company purchased a machine for $198,000 on January 2, 2016. It made the following estimates: Service life 5 years or 10,000 hours Production 180,000 units Residual value $ 18,000 In 2016, Gruman uses the machine for 2,000 hours and produces 45,000 units. In 2017, Gruman uses the machine for 1,200 hours and produces 32,000 units. If required, round your final answers to the nearest dollar. Required: Compute the depreciation for 2016 and 2017 under each of the following methods: Straight-line method 2016 $ fill in the blank 1 2017 $ fill in the blank 2 Sum-of-the-years'-digits method 2016 $ fill in the blank 3 2017 $ fill in the blank 4 Double-declining-balance method 2016 $ fill in the blank 5 2017 $ fill in the blank 6 Activity method based on hours worked 2016 $ fill in the blank 7 2017 $ fill in the blank 8 Activity method based on units of output 2016 $ fill in the blank 9 2017 $ fill in the blank 10…arrow_forward
- Depreciation Methods Gruman Company purchased a machine for $220,000 on January 2, 2016. It made the following estimates: Service life 5 years or 10,000 hours Production 200,000 units Residual value $20,000 In 2016, Gruman uses the machine for 1,800 hours and produces 44,000 units. In 2017, Gruman uses the machine for 1,500 hours and produces 35,000 units. If required, round your final answers to the nearest dollar. Required: 1. Compute the depreciation for 2016 and 2017 under each of the following methods: a. Straight-line method 2016 $ 2017 $ b. Sum-of-the-years'-digits method 2016 $ 2017 $ c. Double-declining-balance method 2016 $ 2017 $ d. Activity method based on hours worked 2016 $ 2017 $ e. Activity method based on units of output 2016 $ 2017 $ 2. For each method, what is the book value of the machine at the end of 2016? At the end of 2017? a. Straight-line method 2016 $ 2017 $arrow_forwardOn January 2, 2016, Rafa Company purchased a franchise with a useful life of 10 years for $50,000. An additional franchise fee of 3% of franchise operating revenues also must be paid each year to the franchisor. Revenues during 2016 totaled $400,000. In its December 31, 2016, balance sheet, what net amount should Rafa report as an intangible asset-franchise? a. $33,000 b. $43,800 c. $45,000 d. $50,000arrow_forwardIntangible Long-Term Assets Track Town Co. had the following transactions involving intangible assets: Purchased a patent for leather soles for $10,000 and estimated its useful life to be Jan. 1 10 years. Purchased a copyright for a design for $15,000 with a life left on the copyright of Apr. 1 25 years. The estimated remaining (economic) life of the copyright is five years. Signed a five-year franchise agreement and opened a Starting Line high-tech July 1 running shoe store. Paid $50,000 to the franchisor. Required: 1. Using the straight-line method, calculate the amortization of the patent, copyright, and Franchise. a. Patent 10,000 x b. Copyright $ c. Franchise Feedback 2. Prepare general journal entries to record the end-of-year amortizations. Page: 1 DOC. POST. NO. REF. DATE ACCOUNT TITLE DEBIT CREDIT 20-- Dec. 31 2 2 3 3 4 Dec. 31 4 6 6 7 Dec. 31 7arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Accounting for Derivatives_1.mp4; Author: DVRamanaXIMB;https://www.youtube.com/watch?v=kZky1jIiCN0;License: Standard Youtube License
Depreciation|(Concept and Methods); Author: easyCBSE commerce lectures;https://www.youtube.com/watch?v=w4lScJke6CA;License: Standard YouTube License, CC-BY