ch12 - SOLUTIONS TO B EXERCISES E12-1B (1520 minutes) (a)...

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Unformatted text preview: SOLUTIONS TO B EXERCISES E12-1B (1520 minutes) (a) 1, 2, 3, 5, 9, 15, 17 (b) 4. Long-term investments, or other assets, in the balance sheet. 6. Expensed in the income statement. 7. Research and development expense in the income statement. 8. Research and development expense in the income statement. 10. Research and development expense in the income statement. 11. Property, plant, and equipment in the balance sheet. 12. Current asset (prepaid rent) in the balance sheet. 13. Research and development expense in the income statement. 14. Operating losses in the income statement. 16. Not recorded; any costs related to creating goodwill incurred internally must be expensed. 18. Research and development expense in the income statement. 19. Charge as expense in the income statement. 20. Charge as expense in the income statement. 21. Property, plant, and equipment in the balance sheet. 22. Research and development expense in the income statement. 23. Long-term investments in the balance sheet. 12-1 E12-2B (1015 minutes) The following items would be classified as intangible assets: Cable television franchises Film contract rights Music copyrights Customer lists Goodwill Covenants not to compete Internet domain name Brand names The following would be classified as current assets: Cash Notes receivable Accounts receivable Prepaid expenses The following would be classified as non-current assets in the property, plant, and equipment section: Property, plant, and equipment Land The following would be classified as part of the investments section of the balance sheet: Investments in affiliated companies The following would be classified as an operating expense: Research and development costs Discount on notes payable is shown as a deduction from the related notes payable on the balance sheet. Organization costs are start-up costs and should be expensed as incurred. 12-2 E12-3B (1015 minutes) (a) Trademarks $150,000 Excess of cost over fair value of net assets of acquired subsidiary (goodwill) 750,000 Total intangible assets $900,000 (b) Organization costs, $120,000, should be expensed. Discount on bonds payable, $45,000, 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, $25,000, 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, $300,000, 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, $800,000, should be classified as research and development expense on the income statement....
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ch12 - SOLUTIONS TO B EXERCISES E12-1B (1520 minutes) (a)...

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