Chapter 12 solutions

Chapter 12 solutions - Chapter 12 BRIEF EXERCISE 12-1...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 12 BRIEF EXERCISE 12-1 Patents 54,000 Cash 54,000 Patent Amortization Expense 5,400 Patents ($54,000 X 1/10 = $5,400) 5,400 BRIEF EXERCISE 12-2 Patents 24,000 Cash 24,000 Patent Amortization Expense 8,400 Patents [($43,200 + $24,000) X 1/8 = $8,400] 8,400 BRIEF EXERCISE 12-3 Trade Name 68,000 Cash 68,000 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Trade Name Amortization Expense 8,500 Trade Name ($68,000 X 1/8 = $8,500) 8,500 BRIEF EXERCISE 12-4 Franchise 120,000 Cash 120,000 Franchise Amortization Expense 11,250 Franchise ($120,000 X 1/8 X 9/12 = $11,250) 11,250 BRIEF EXERCISE 12-6 Loss on Impairment 190,000 Patents ($300,000 – $110,000) 190,000 Note : An impairment has occurred because expected net future cash flows ($210,000) are less than the carrying amount ($300,000). The loss is measured as the difference between the carrying amount and fair value ($110,000). BRIEF EXERCISE 12-8 Loss on Impairment ($400,000 – $350,000) 50,000 Goodwill 50,000 2
Background image of page 2
The fair value of the reporting unit ($750,000) is less than the carrying value ($800,000)—an impairment has occurred. The loss is the difference between the recorded goodwill and the implied goodwill. BRIEF EXERCISE 12-10 Research and Development Expense 430,000 Cash 430,000 BRIEF EXERCISE 12-11 (a) Capitalize (b) Expense (c) Expense (d) Expense BRIEF EXERCISE 12-12 Carrying Amount Life in Months Amortization Per Month Months Amortization Patent (1/1/10) $288,000 96 $3,000 12 Legal costs (12/1/10) 85,000 85 $1,000 1 $373,000 Carrying amount $373,000 3
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Less: Amortization of patent (12 X $3,000) (36,000) Legal costs amortization (1 X $1,000) (1,000 ) Carrying amount 12/31/10 $336,000 BRIEF EXERCISE 12-13 Copyright No. 1 for $9,900 should be expensed and therefore not reported on the balance sheet. Copyright No. 2 for $24,000 should be capitalized. Because the useful life is indefinite, copyright No. 2 should be tested at least annually for impairment using a fair value test. It would be reflected on the December 31, 2010 balance sheet at its cost of $24,000. *BRIEF EXERCISE 12-14 Percent of revenue approach $800,000 X $420,000 = $240,000 $1,400,000* *($420,000 + $980,000) Straight-line approach $800,000 X 1/4 = $200,000 4
Background image of page 4
Amortization is $240,000; percentage of revenue is greater. 5
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
EXERCISE 12-5 (15–20 minutes) Research and Development Expense 940,000 Patents 75,000 Rent Expense [(5 ÷ 7) X $91,000] 65,000 Prepaid Rent [(2 ÷ 7) X $91,000] 26,000 Advertising Expense 207,000 Income Summary (or a loss account) 141,000 Discount on Bonds Payable 82,950* Interest Expense 1,050 Paid in Capital in Excess of Par on Common Stock 250,000 Intangible Assets 1,288,000 *84,000 ÷ 240 months = $350; $350 X 3 = $1,050; $84,000 – $1,050 = $82,950 Patent Amortization Expense [($75,000 ÷ 12) X 1/2] 3,125 Patents (or Accumulated Amortization) 3,125 6
Background image of page 6
EXERCISE 12-6 (15–20 minutes) 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
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 36

Chapter 12 solutions - Chapter 12 BRIEF EXERCISE 12-1...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online