Additional Problems-Chapter 12

Additional Problems-Chapter 12 - Try Exercises...

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Try Exercises 12-4,6,8,10,12,16,17 EXERCISE 12-4 1. Palmiero should report the patent at $900,000 (net of $600,000 accumulated amortization) on the balance sheet. The computation of accumulated amortization is as follows. Amortization for 2008 and 2009 ($1,500,000/10) X 2. ........ $300,000 2010 amortization: ($1,500,000 – $300,000) ÷ (6 – 2). ....... 300,000 Accumulated amortization, 12/31/10. ................................. $600,000 2. Palmiero should amortize the franchise over its estimated useful life. Because it is uncertain that Palmiero will be able to retain the franchise at the end of 2018, it should be amortized over 10 years. The amount of amortization on the franchise for the year ended December 31, 2010, is $35,000: ($350,000/10). 3. These costs should be expensed as incurred. Therefore $275,000 of organization expense were reported in income for 2008. 4. Because the license can be easily renewed (at nominal cost), it has an indefinite life. Thus, no amortization will be recorded. The license will be tested for impairment in future periods. EXERCISE 12-6 Patents. ................................................................... 380,000 Goodwill. ................................................................. 360,000 Franchise. ............................................................... 450,000 Copyright. ............................................................... 156,000 Research and Development Expense. ................ 215,000 Intangible Assets. ......................................... 1,561,000 Amortization Expense. .......................................... 83,000 Patents ($380,000/8). .................................... 47,500 Franchise ($450,000/10 X 6/12). .................. 22,500 Copyright ($156,000/5 X 5/12). .................... 13,000 Balance of Intangible Assets as of December 31, 2010
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Patents = $380,000 – $47,500 = $332,500 Goodwill = $360,000 (no amortization) Franchise = $450,000 – $22,500 = $427,500 Copyright = $156,000 – $13,000 = $143,000
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This note was uploaded on 04/29/2011 for the course ACCT 3001 taught by Professor Erickson during the Spring '10 term at University of Minnesota Duluth.

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Additional Problems-Chapter 12 - Try Exercises...

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