Solutions to intangibles practice problems

Solutions to intangibles practice problems - Solutions to...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
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
Image of page 1

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

View Full Document Right Arrow Icon
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 ............................................................. 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.
Image of page 2
(b) Trademark Amortization Expense .......................................... 1,500 Trademarks ([$15,000 – $3,000] X 1/4 X 6/12) ................... 1,500 EXERCISE 12-14 (15–20 minutes) (a) December 31, 2010 Loss on Impairment ....................................................... 900,000* Copyrights ........................................................... 900,000 *Carrying amount .............................. $4,300,000 Fair value ......................................... Loss on impairment ........................ 3,400,000 $ 900,000 Note : Asset fails recoverability test, future cash flows ($4,000,000) < carrying amount ($4,300,000).
Image of page 3

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

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern