f7f8505e39106437fcb7f881fe478315e3671618.xlsx, Exercise 12-3 Solution, Page 1 of 8, 03/29/2012, 01:32:23
Discount on bonds payable
Total intangible assets
Edition by Kieso, Weygandt, and Warfield
Primer on Using Excel in Accounting
by Rex A Schildhouse
E12-3 (Classification Issues—Intangible Asset)
Langrova Inc. has the following amounts included in its
general ledger at December 31, 2012.
Deposits with advertising agency for ads to promote goodwill
Excess of cost over fair value of net identifiable assets of acquired
Cost of equipment acquired for research and development projects;
the equipment has an alternative future use
Costs of developing a secret formula for a product that is expected
to be marketed for at least 20 years
On the basis of the information above, compute the total amount to be reported by Langrova for
intangible assets on its balance sheet at December 31, 2012. Equipment has alternative future
Excess of cost over fair value of net assets of
acquired subsidiary (goodwill)
If an item is not to be included in intangible assets, explain its proper treatment for reporting
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.