During the current year, Black Corporation incurred the following expenditures whichshould berecorded either as operating expenses or as intangible assets and name the asset andexplain why you categorize particular asset.a. Expenditures were made for the training of new employees. The average employeeremainswith the company for five years, but is trained for a new position every two years.b. Black purchased a controlling interest in a vinyl flooring company. The expenditure resultedin the recording of a significant amount of goodwill. Black expects to earn above-averagereturns on this investment indefinitely.c. Black incurred large amounts of research and development costs in developing a dirt-resistantcarpet fiber. The company expects that the fiber will be patented and that sales of theresultingproducts will contribute to revenue for at least 25 years. The legal life of the patent, however,will be only 20 years.d. Black made an expenditure to acquire the patent on a popular carpet cleaner. The patenthad aremaining legal life of 14 years, but Black expects to produce and sell the product for only sixmore years.e. Black spent a large amount to sponsor the televising of the Olympic Games. Black's intentwas to make television viewers more aware of the company's name and its product lines.

Operating expenses are the expenses (or expenditures) that a company incurs in order to operate the…

During the current year, Black Corporation incurred the following expenditures which should be recorded either as operating expenses or as intangible assets and name the asset and explain why you categorize particular asset.

During the current year, Black Corporation incurred the following expenditures which should be recorded either as operating expenses or as intangible assets and name the asset and explain why you categorize particular asset.

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 26P

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Question

During the current year, Black Corporation incurred the following expenditures which
should be
recorded either as operating expenses or as intangible assets and name the asset and
explain why you categorize particular asset.
a. Expenditures were made for the training of new employees. The average employee
remains
with the company for five years, but is trained for a new position every two years.
b. Black purchased a controlling interest in a vinyl flooring company. The expenditure resulted
in the recording of a significant amount of goodwill. Black expects to earn above-average
returns on this investment indefinitely.
c. Black incurred large amounts of research and development costs in developing a dirt-
resistant
carpet fiber. The company expects that the fiber will be patented and that sales of the
resulting
products will contribute to revenue for at least 25 years. The legal life of the patent, however,
will be only 20 years.
d. Black made an expenditure to acquire the patent on a popular carpet cleaner. The patent
had a
remaining legal life of 14 years, but Black expects to produce and sell the product for only six
more years.
e. Black spent a large amount to sponsor the televising of the Olympic Games. Black's intent
was to make television viewers more aware of the company's name and its product lines.

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