3101 Homework Solutions ch.12

3101 Homework Solutions ch.12 - Acct 3101 Intermed Acctg 1...

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Acct 3101 Intermed. Acctg 1 Homework Solutions Text: Kieso et al. 13 th ed. Chapter 12 EXERCISE 12-3 (a) Trademarks. ................................................................................. $20,000 Excess of cost over fair value of net identifiable assets of acquired subsidiary (goodwill). ................................. 75,000 Total intangible assets. ................................................................. $95,000 (b) Organization costs, $24,000, should be expensed. Discount on bonds payable, $35,000, should be reported as a contra account to bonds payable in the long-term liabilities section. Deposits with advertising agency for ads to promote goodwill of company, $10,000, should be reported either as an expense or as prepaid advertising in the current assets section. Advertising costs in general are expensed when incurred or when first used. Cost of equipment acquired for research and development projects, $90,000, should be reported with property, plant, and equipment, because the equipment has an alternative use. Costs of developing a secret formula for a product that is expected to be marketed for at least 20 years, $70,000, should be classified as research and development expense on the income statement. File: 3101 homework solutions ch.12 Page 1
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EXERCISE 12-12 Net assets of Terrell as reported. ......................................... $225,000 Adjustments to fair value Increase in land value. ................................................ 50,000 Decrease in equipment value. ..................................... (5,000 ) 45,000 Net assets of Terrell at fair value. ........................................ 270,000 Selling price. ........................................................................... 380,000 Amount of goodwill to be recorded. ..................................... $110,000 The journal entry to record this transaction is as follows:
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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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3101 Homework Solutions ch.12 - Acct 3101 Intermed Acctg 1...

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