ACTP 5007 Review problems week 1 (13e) (rev)

ACTP 5007 Review problems week 1 (13e) (rev) - CHAPTER 12...

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Exercise 12-13  (Accounting for Goodwill) On July, 2010, Brandon Corporation purchased Mills Company by paying $250,000 cash and issuing a $150,000 note payable. At July 1, 2010, the balance sheet of Mills Company was as follows: Cash $50,000  Accounts Payable $200,000  Receivables $90,000  Stockholders' equity 235,000 Inventory 100,000 $435,000  Land 40,000 Buildings (net) 75,000 Equipment (net) 70,000 Trademarks 10,000 $435,000  The recroded amounts all approximate current values except for land (fair value of $80,000),  inventory (fair value of $125,000), and trademarks (fair value of $15,000) Instructions (a)  Prepare the July 1 entry for Brandon Corporation to record the purchase. Cash 50,000 Receivables 90,000 Inventory 125,000 Land 80,000 Buildings 75,000 Equipment 70,000 Trademarks 15,000 Goodwill 95,000*         Accounts Payable 200,000        Notes Payable   150,000        Cash 250,000 *$400,000 – [$235,000 + $40,000 + $25,000 + $5,000]  Note that the building and equipment would be recorded at the 7/1/10 cost to Brandon; accumulated depreciation accounts would not be recorded. (b)  Prepare the December 31 entry for Brandon Corporation to record amortization of       intangibles. The trademark has an estimated useful life of 4 years with a residual       value of $3,000.        Trademark Amortization Expense 1,500                   Trademarks ([$15,000 – $3,000] X 1/4 X 6/12) 1,500
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Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2009, the company expends $325,000 on a research project, but by the end of 2009 it is impossible to determine whether any benefit will be derived from it. Instructions a)  What account should be charged for the $325,000, and how should it be  shown in the financial statements? In accordance with FASB Statement No. 2, the $325,000 is a research and development costs that should be charged to R&D Expense and, if not separately disclosed in the income state- statements.  costs to complete the project are $130,000.  The administrative and legal expenses  incurred in obtaining patent number 472-1001-84 in 2010 total $24,000. The  patent has an expected useful life of 5 years.  Record these costs in journal entry form.  Also, record patent amortization (full year) in 2010. Research and Development Expense
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This note was uploaded on 06/06/2011 for the course ACCT 5007 taught by Professor Cherieabaker during the Spring '09 term at Nova Southeastern University.

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ACTP 5007 Review problems week 1 (13e) (rev) - CHAPTER 12...

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