ACC325_EX4_P1_Solutions - 2011 Irey borrowed $1,200,000...

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22. ELO Corporation purchased a patent for $90,000 on September 1, 2008. It had a useful life of 10 years. On January 1, 2010, ELO spent $22,000 to successfully defend the patent in a lawsuit. ELO feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2010? A) $20,600. B) $20,000.** C) $18,800. D) $15,600.
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Book value as on January 01, 2010 $78,000 Add cost of lawsuit $22,000 Total book value $100,000 Remaining useful life 5 years Amortisaztion per year $20,000 patent amortization expense for 2010 $20,000 Correct answer is - b - $20,000 On December 31, 2010, Irey Co. has $2,000,000 of short-term notes payable due on February 14, 2011. On January 10, 2011, Irey arranged a line of credit with County Bank which allows Irey to borrow up to $1,500,000 at one percent above the prime rate for three years. On February 2,
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Unformatted text preview: 2011, Irey borrowed $1,200,000 from County Bank and used $500,000 additional cash to liquidate $1,700,000 of the short-term notes payable. The amount of the short-term notes payable that should be reported as current liabilities on the December 31, 2010 balance sheet which is issued on March 5, 2011 is $2,000,000 – $1,200,000 = $800,000. LeMay Frosted Flakes Company offers its customers a pottery cereal bowl if they send in 4 boxtops from LeMay Frosted Flakes boxes and $1.00. The company estimates that 60% of the boxtops will be redeemed. In 2010, the company sold 500,000 boxes of Frosted Flakes and customers redeemed 220,000 boxtops receiving 55,000 bowls. If the bowls cost LeMay Company $2.50 each, how much liability for outstanding premiums should be recorded at the end of 2010? B {[(500,000 × .60) – 220,000] ÷ 4} × $1.50 = $30,000....
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This note was uploaded on 04/10/2011 for the course ACC 325 taught by Professor Sign during the Spring '11 term at S. Alabama.

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ACC325_EX4_P1_Solutions - 2011 Irey borrowed $1,200,000...

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