Unit 4 Homework Guidance

Unit 4 Homework Guidance - LO 9,10 EXERCISE 8-13 RESEARCH...

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LO 9,10 EXERCISE 8-13 RESEARCH AND DEVELOPMENT AND PATENTS
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a. All research and development costs should be treated as an expense. The 2008 income statement should reflect an expense of $20,000. b. Patent costs should be treated as an asset. The 2008 balance sheet should reflect a Patent account of $10,000 – ($10,000/5 years) = $8,000 . c. The $8,000 cost of defending the patent should be added to the Patent account and reflected in the 2009 balance sheet. 2008 amortization = $10,000/5 years = $2,000 2009 amortization = $10,000 – $2,000 + $8,000 = $16,000 $16,000/4 years = $ 4,000
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LO 1,3,5,7,8 PROBLEM 8-6 COST OF ASSETS, SUBSEQUENT BOOK VALUES, AND BALANCE SHEET PRESENTATION 1. Values assigned to each asset: a. Value at time of purchase: $14,000 + $4,800 = $18,800 b. Allocation of purchase price: Supplies expense $200/$3,200 × $2,400 = $ 150 Office furniture $600/$3,200 × $2,400 = $ 450 Equipment $2,400/$3,200 × $2,400 = $1,800 c. Value of this Prepaid License Expense: $1,500 d. Cost of truck $12,000 Less: Accumulated depreciation at time of sale [($12,000 – $800) × 5/8] 7,000 Book value $ 5,000 2. Depreciation or other expense recorded for each asset during 2008: a. ($18,800 – $800)/4 years = $4,500 b. Supplies expense $ 150 Depreciation of office furniture $450/9 years = $ 50 Depreciation of equipment $1,800/4 years = $450 c. $1,500/3 years = $500 × 11/12 = $458 d. Depreciation $11,200/8 years = $1,400 × 8/12 = $933 Book value at the time of sale
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Unit 4 Homework Guidance - LO 9,10 EXERCISE 8-13 RESEARCH...

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