Unit 10 Study Exercises.docx - Question 10.1 Amplify Inc...

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Question 10.1 Amplify Inc. purchased a patent on September 1, 2018 for $41,080. At the time of purchase, Amplify estimated that the patent’s economic benefits would last until the end of 2022. Amplify’s fiscal year end was December 31. On April 1, 2021, Amplify sold the patent to another company. Required 1. Prepare the journal entry to record the sale, assuming Amplify sold the patent for $21,690. 2. Prepare the journal entry to record the sale, assuming Amplify sold the patent for $12,240. Cost of Patents 41,080 Life of Patents (Sep 2018 – Dec 2022 52 months Amortization each month 41,080/52 790 (monthly) April 31 months (790 * 31) 24,490 Book Value of Patent 41,080 – 24,490 16,590 Account Debit Credit Cash 21,690 Gain on disposal of asset (21,690-16,590) 5,100 Paten Rights 16,590 Cash 12,240 Loss on disposal of asset (12,240-16,590) 4,350 Paten Rights 16,590 Question 10.2 B52 Corporation’s pre-tax accounting income of $726,000 for the year 2018 included the following items: Amortization of identifiable intangibles $140,000 Depreciation of building 119,000 Loss from discontinued operations 46,000 Unusual, non-recurring gains 157,000 Profit-sharing payments to employees 69,300 Lush Industries Ltd. would like to purchase B52 Corporation. In trying to measure B52’s normalized earnings for 2018, Lush determines that the building’s fair value is triple the book value and that its

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