Team Assignments Answers-Week 1

Team Assignments Answers-Week 1 - PROBLEM 12-1 Franchises....

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PROBLEM 12-1 Franchises. ........................................................................ 48,000 Prepaid Rent. .................................................................... 24,000 Retained Earnings (Organization Costs of $6,000 in 2009). ......................................................... ....................................................................................... 6,000 Retained Earnings ($16,000 – $6,000). ........................... 10,000 Patents ($84,000 + $12,650). ............................................ 96,650 Research and Development Expense ($75,000 + $160,000). ..................................................... 235,000 Goodwill. ........................................................................... 278,400 Intangible Assets. ........................................................ 698,050 Franchise Amortization Expense ($48,000 ÷ 8). ............ 6,000 Retained Earnings ($48,000 ÷ 8 X 6/12). ........................ 3,000 Franchises. ................................................................... 9,000
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Rent Expense ($24,000 ÷ 2). ............................................. 12,000 Retained Earnings ($24,000 ÷ 2 X 3/12). ........................ 3,000 Prepaid Rent. ............................................................... 15,000 Patent Amortization Expense. ......................................... 9,170 Patents. ......................................................................... 9,170 ($84,000 ÷ 10) + ($12,650 X 7/115) Note : No amortization of goodwill; goodwill should be tested for impairment on at least an annual basis in future periods.
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PROBLEM 12-4 (a) Income statement items and amounts for the year ended December 31, 2010: Research and development expenses*. ................................. $288,000 Amortization of patent ($88,000 ÷ 10 years). ....................... 8,800 *The research and development expenses could be listed by the components rather than in one total. The detail of the research and development expenses are as follows: Depreciation—building ($320,000 ÷ 20 years). .......................................................... $ 16,000 Salaries and employee benefits. ............................................. 195,000
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Team Assignments Answers-Week 1 - PROBLEM 12-1 Franchises....

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