Solutions to intangibles practice problems

Solutions to intangibles practice problems - Solutions to...

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Unformatted text preview: Solutions to Intangibles Practice Problems EXERCISE 12-10 (15–20 minutes) (a) 2007 Research and Development Expense .... 170,000 Cash ................................................ 170,000 Patents ..................................................... 24,000 Cash ................................................ 24,000 Patent Amortization Expense ................. 600 Patents [($24,000 ÷ 10) X 3/12] ....... 600 2008 Patent Amortization Expense ................. 2,400 Patents ($24,000 ÷ 10) .................... 2,400 (b) 2009 Patents ............................................................. 12,400 Cash ........................................................ 12,400 Patent Amortization Expense ......................... 2,575 Patents ($1,000 + $1,575) ....................... 2,575 [Jan. 1–June 1: ($24,000 ÷ 10) X 5/12 = $1,000 June 1–Dec. 31: ($24,000 – $600 – $2,400 – $1,000 + $12,400) = $32,400; ($32,400 ÷ 12) X 7/12 = $1,575] 2010 Patent Amortization Expense ......................... 2,700 Patents ($32,400 ÷ 12) ............................ 2,700 (c) 2011 and 2012 Patent Amortization Expense ......................... 14,063 Patents ($28,125 ÷ 2) .............................. 14,063 ($32,400 – $1,575 – $2,700) = $28,125 EXERCISE 12-12 (20–25 minutes) Net assets of Terrell as reported ................................. $225,000 Adjustments to fair value Increase in land value ......................................... 50,000 Decrease in equipment value ............................. (5,000 ) Net assets of Terrell at fair value ................................ 45,000 270,000 Selling price .................................................................. Amount of goodwill to be recorded ............................ 380,000 $110,000 The journal entry to record this transaction is as follows: Cash .............................................................................. 100,000 Land .............................................................................. 120,000 Building ......................................................................... 200,000 Equipment ..................................................................... 170,000 Copyright ...................................................................... 30,000 Goodwill ........................................................................ 110,000 Accounts Payable ............................................... 50,000 Long-term Notes Payable ................................... 300,000 Cash ..................................................................... 380,000 EXERCISE 12-13 (10–15 minutes) (a) Cash ..................................................................... 50,000 Receivables ......................................................... 90,000 Inventory .............................................................. 125,000 Land .................................................................... 80,000 Buildings .............................................................Buildings ....
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This note was uploaded on 11/05/2011 for the course ACCT 401 taught by Professor Winchel during the Spring '10 term at South Carolina.

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Solutions to intangibles practice problems - Solutions to...

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