MIDTERM_HINTS_SOLUTIONS[1] - MIDTERM HINTS SOLUTIONS...

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MIDTERM HINTS SOLUTIONS EXERCISE 12-2 The following items would be classified as an intangible asset: Cable television franchises Film contract rights Music copyrights Customer lists Goodwill Covenants not to compete Internet domain name Brand names Cash, accounts receivable, notes receivable, and prepaid expenses would be classified as current assets. Property, plant, and equipment, and land would be classified as non- current assets in the property, plant, and equipment section. Investments in affiliated companies would be classified as part of the investments section of the balance sheet. Research and development costs would be classified as an operating expense. 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. EXERCISE 12-10 (a) 2003 Research and Development Expense. ............ 170,000 Cash. ....................................................... 170,000 Patents. ............................................................. 18,000
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Cash. ....................................................... 18,000 Patent Amortization Expense. ........................ 450 Patents [($18,000 ÷ 10) X 3/12]. ........... 450 2004 Patent Amortization Expense. ........................ 1,800 Patents ($18,000 ÷ 10). .......................... 1,800 (b) 2005 Patents. ................................................................ 9,480 Cash. ......................................................... 9,480 Patent Amortization Expense. .......................... 1,940 Patents ($750 + $1,190). ........................... 1,940 [Jan. 1–June 1: ($18,000 ÷ 10) X 5/12 = $750 June 1–Dec. 31: ($18,000 – $450 – $1,800 – $750 + $9,480) = $24,480; ($24,480 ÷ 12) X 7/12 = $1,190] 2006 Patent Amortization Expense. .......................... 2,040 Patents ($24,480 ÷ 12). ............................. 2,040 (c) 2007 and 2008 Patent Amortization Expense. .......................... 10,625 Patents ($21,250 ÷ 2). ............................... 10,625 ($24,480 – $1,190 – $2,040) = $21,250 EXERCISE 12-13 (a) Cash. ............................................................................. ...................................................................................... 50,000 Receivables. ................................................................. 90,000 Inventory. ..................................................................... 125,000 Land . ........................................................................... 60,000
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Buildings. ..................................................................... 75,000 Equipment. .................................................................. 70,000 Trademarks. ................................................................ 15,000 Goodwill. ...................................................................... 65,000* Accounts Payable. ............................................. 200,000 Notes Payable. ................................................... 100,000
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This note was uploaded on 11/17/2010 for the course ACC ACC551 taught by Professor Brennan during the Spring '10 term at Keller Graduate School of Management.

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MIDTERM_HINTS_SOLUTIONS[1] - MIDTERM HINTS SOLUTIONS...

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