Computations Percent of revenue approach 600000 x 360000360000

Computations percent of revenue approach 600000 x

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Solution 12-143 Computations: Percent of revenue approach$600,000 x [$360,000/($360,000 + $840,000)] = $180,000 Straight-line approach$600,000 x 1/5 = $120,000 Journal Entry: Amortization Expense 180,000 Computer Software Costs 180,000 PROBLEMS Pr. 12-144—Intangible assets. The following transactions involving intangible assets of Minton Corporation occurred on or near December 31, 2010. Complete the chart below by writing the journal entry(ies) needed at that date to record the transaction and at December 31, 2011 to record any resultant amortization. If no entry is required at a particular date, write "none needed." To download more slides, ebook, solutions and test bank, visit
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Intangible Assets 12 - 43Pr. 12-144(Cont.) On Date On of TransactionDecember 31, 20111. Minton paid Grand Company $500,000 for the exclusive right to market a particular product, using the Grand name and logo in promotional material. The franchise runs for as long as Minton is in business. 2. Minton spent $600,000 developing a new manu-facturing process. It has applied for a patent, and it believes that its application will be successful. 3. In January, 2011, Minton's application for a patent (#2 above) was granted. Legal and registration costs incurred were $120,000. The patent runs for 20 years. The manufacturing process will be useful to Minton for 10 years. 4. Minton incurred $192,000 in successfully defend-ing one of its patents in an infringement suit. The patent expires during December, 2014. 5. Minton incurred $480,000 in an unsuccessful patent defense. As a result of the adverse verdict, the patent, with a remaining unamortized cost of $252,000, is deemed worthless. 6. Minton paid Sneed Laboratories $104,000 for research and development work performed by Sneed under contract for Minton. The benefits are expected to last six years. Solution 12-144 On Date of TransactionOn December 31, 20111. Franchise ............500,000 1. “None needed.” Cash ..............500,000 2. Research and 2. "None needed." Devel. Expense ... 600,000 Cash ..............600,000 3. Patents ................120,000 3. Patent Amortization Cash ..............120,000 Expense .....................12,000 Patents .................12,000 4. Patents ................192,000 4. Patent Amortization Cash ..............192,000 Expense .....................48,000 Patents .................48,000 To download more slides, ebook, solutions and test bank, visit
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Test Bank for Intermediate Accounting, Thirteenth Edition 12 - 44Solution 12-144(Cont.) 5. Legal Fees Exp. .. 480,000 5. “None needed.” Cash ..............480,000 Patent Expense ... 252,000 Patents ..........252,000 6. Research and 6. "None needed." Devel. Expense ... 104,000 Cash ..............104,000 Pr. 12-145—Goodwill, impairment. On May 31, 2011, Armstrong Company paid $3,500,000 to acquire all of the common stock of Hall Corporation, which became a division of Armstrong. Hall reported the following balance sheet at the time of the acquisition: Current assets $ 900,000 Current liabilities $ 600,000 Noncurrent assets 2,700,000Long-term liabilities 500,000 Stockholders’ equity 2,500,000Total liabilities and Total assets $3,600,000stockholders’ equity $3,600,000It was determined at the date of the purchase that the fair value of the identifiable net assets of Hall was $2,800,000. At December 31, 2011, Hall reports the following balance sheet information: Current assets $ 800,000 Noncurrent assets (including goodwill recognized in purchase) 2,400,000 Current liabilities (700,000) Long-term liabilities (500,000) Net assets $2,000,000
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