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
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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