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ch12AdditionalAnswers - CHAPTER 12 Intangible Assets...

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Intangible Assets EXERCISE 12-3 (a) Trademarks. ......................................................................... $20,000 Excess of cost over fair value of net identifiable assets of acquired subsidiary (goodwill). ..................... 75,000 Total intangible assets. ...................................................... $95,000 (b) Organization costs, $24,000, should be expensed. Discount on bonds payable, $35,000, should be reported as a contra account to bonds payable in the long-term liabilities section. Deposits with advertising agency for ads to promote goodwill of company, $10,000, should be reported either as an expense or as prepaid advertising in the current assets section. Advertising costs in general are expensed when incurred or when first used. Cost of equipment acquired for research and development projects, $90,000, should be reported with property, plant, and equipment, because the equipment has an alternative use. Costs of developing a secret formula for a product that is expected to be marketed for at least 20 years, $70,000, should be classified as research and development expense on the income statement. EXERCISE 12-4 1. Palmiero should report the patent at $900,000 (net of $600,000 accumulated amortization) on the balance sheet. The computation of accumulated amortization is as follows. Amortization for 2008 and 2009 ($1,500,000/10) X 2. ........ $300,000 2010 amortization: ($1,500,000 – $300,000) ÷ (6 – 2). ....... 300,000 Accumulated amortization, 12/31/10. ................................. $600,000 2. Palmiero should amortize the franchise over its estimated useful life. Because it is uncertain that Palmiero will be able to retain the franchise
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This note was uploaded on 04/14/2010 for the course TOBIN 630 taught by Professor Alan during the Fall '10 term at Adams State University.

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ch12AdditionalAnswers - CHAPTER 12 Intangible Assets...

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