On January 1, 2020, Dopey Enterprises, Inc. developed a new machine that reduces the time requiredto insert the fortunes into their fortune cookies. Because the process is considered very valuable to thefortune cookie industry, Dopey had the machine patented. The following expenses were incurred indeveloping and patenting the machine:Research and development laboratory expensesP250,00080,00032,000120,000Metal used in construction of the machineBlueprints used to design the machineLegal expenses to obtain patentWages paid for the employees on the research, development andthe building of the machine; 60% of the time was spent in actualbuilding of the machineExpense of drawing required by the patent office to be submitted withthe patent applicationFees paid to government patent office to process application150,00017,00024,500On January 2, 2021, Dopey Enterprises, Inc. paid P35,200 in legal fees to successfully defend the patentagainst an infringement suit by Snow White Company. What is the carrying value of the patent inDecember 31, 2021?

On January 1, 2020 Dopey Enterprises, Inc. developed a new machine that reduces the time required to…

On January 2, 2021, Dopey Enterprises, Inc. paid P35,200 in legal fees to successfully defend the patent against an infringement suit by Snow White Company. What is the carrying value of the patent in December 31, 2021?

On January 2, 2021, Dopey Enterprises, Inc. paid P35,200 in legal fees to successfully defend the patent against an infringement suit by Snow White Company. What is the carrying value of the patent in December 31, 2021?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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During 2022, Harper Corporation spent $500,000 developing a new product, $75,000 in legal fees to obtain a patent on the product, and $100,000 to market the product that was patented. Describe how each of these costs should be accounted for in 2022? Do NOT prepare any journal entries! Use complete sentences and correct grammar.
Paradise, a manufacturer located in rural New Brunswick, purchased a widget-making machine in2017 and depreciated it using the double-declining-balance method. As at Paradise’s fiscal year-end in2021 (March 31, 2021), the net book value of the widget-making machine was $500,000.On March 31, 2021, Paradise realized that there were breakthroughs in widget manufacturing whichwould put their machine into obsolescence in exactly 7 years. The widget-making machine wasappraised to have a fair value of $400,000; costs of disposal of $15,000; future discounted netcashflows of $415,000; and future undiscounted net cashflows of $450,000.Paradise plans to use the machine for the next 7 years while it invests in research and development(R&D) to construct an in-house piece of widget-making equipment. Starting on April 1, 2021, however,Paradise will switch to the straight line method of depreciation.Required(a) If required, prepare the journal entry(ies) in good form to record impairment loss…
On September 10, 2020, Vaughn Manufacturing incurred the following costs for one of its printing presses: Purchase of attachment $58500 Installation of attachment 5400 Replacement parts for renovation of press 15200 Labor and overhead in connection with renovation of press 6500 Neither the attachment nor the renovation increased the estimated useful life of the press. However, the renovation resulted in significantly increased productivity. What amount of the costs should be capitalized? $85600. $0 $79100. $70400.
On September 7, 2020, Paseo Company incurred the following costs for one of its printing presses: Purchase of stapling attachment: P900,000 Installation of attachment: P200,000 Replacement parts for renovation of press: P600,000 Labor and overhead in connection with renovation of press: P280,000. Neither the attachment nor the renovation increased the estimated useful life of the press. However, the renovation resulted in significantly increased productivity. What amount of the costs should be capitalized?
The following costs were incurred by Mark Corporation during 2020: Legal fees paid to attorneys in connection with a patent application related to a new invention developed by the company's laboratory personnel: $40,000. Salaries of personnel involved in searching for applications of new research findings: $150,000. Cost of machinery acquired on January 1, 2020: $355,000. The machinery will be used in a current research and development project, as well as several other R&D projects over the next eight years, after which the machine is expected to be sold for $15,000. Mark Corporation uses straight-line depreciation. Costs of design, construction, and testing of preproduction prototypes of potential new product lines for the company: $70,000. Cost of developing a valuable new product that was successfully patented: $100,000. Cost of marketing research to promote the new product: $60,000. Required:Calculate the total research and development expense that should appear in Mark's…
Jenkins, Inc. builds custom machines for manufacturers using robotic equipment. In 2022, the company decided to change from straight-line to double-declining balance depreciation for its robotic equipment. It changed the life expectancy as follows: Original cost of robotic equipment $2,500,000 Accumulated depreciation thru 2021 780,000 Original life in years 8 Remaining life in years 4 Determine the correct amount of depreciation to expense for 2022. Group of answer choices $390,000 $312,500 $430,000 $860,000
On January 1, 2025, Waterway Company rearranged its production line to improve efficiency resulting in greater productivity. The costs to rearrange the plant layout amounted to $129000 and the costs to reinstall some of the machinery components were $82000. What amount of these costs should be capitalized? A. $82000 B. $211000 C. $129000 D. $0
Romo Company spent $190,000 developing a new process, $45,000 in legal fees to obtain a patent, and $91,000 to market the process that was patented, all in the year 2020. How should these costs be accounted for in 2020?
Reveille, Inc., purchased Machine #204 on April 2021, and placed the machine into production on April 3, 2021. The following information is relevant to Machine #204: Price P60,000 Freight-in costs 2,500 Preparation and installation costs 3,900 Labor costs during regular production operation 10,200 Credit terms 2/10, n/30 Total productive output 138,500 units The company expects that the machine could be used for 10 years, after which the salvage value would be zero. However, Reveille, Inc., intends to use the machine only eight years, after which it expects to be able to sell it for P9,800. The invoice for Machine #204 was paid April 10, 2021. The number of units produced in 2021 and 2022 were 23,200 and 29,000, respectively. Reveille computes depreciation to the nearest whole month. Required Compute the depreciation for the years indicated, using the following methods (round your answer to the nearest peso): 2021: Units of productions 2022: Sum-of-the-years’- digits method
BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn’t equipped to do. Estimates regarding each machine are provided below. Machine A Machine B Original cost $78,200 $182,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $19,800 $39,600 Estimated annual cash outflows $5,130 $10,180 Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Machine A Machine B Net present value enter a dollar amount rounded to 0…
Mex Inc. incurred the following costs during 2022: Cost of exploration of new formulas $200,000 Laboratory research aimed at discovery of new technology 225,000 Diagnostics for breakdowns during commercial production 150,000 Periodic design changes to existing products 185,000 Significant modification to the formulation of a chemical product 160,000 How much should Mex report as R&D expense for 2022?
BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn’t equipped to do. Estimates regarding each machine are provided below. Machine A Machine B Original cost $75,500 $190,000 Estimated life 8 years 8 years Salvage value 0 0 Estimated annual cash inflows $19,600 $40,000 Estimated annual cash outflows $4,990 $9,970 Calculate the net present value and profitability index of each machine. Assume a 9% discount rate.