Problem 32-20 (IAA) Royal Company purchased a new trademark and incurred the following costs: 1,000,000 50,000 70,000 Purchase price Nonrefundable value added tax Training of personnel on the use of new trademark Research expenditures associated with the purchase of the new trademark Legal cost incurred to register the new trademark Administrative salaries 240,000 105,000 120,000 What is the initial cost of the trademark? a. 1,000,000 b. 1,155,000 c. 1,465,000 d. 1,585,000

Problem 32-20 (IAA) Royal Company purchased a new trademark and incurred the following costs: 1,000,000 50,000 70,000 Purchase price Nonrefundable value added tax Training of personnel on the use of new trademark Research expenditures associated with the purchase of the new trademark Legal cost incurred to register the new trademark Administrative salaries 240,000 105,000 120,000 What is the initial cost of the trademark? a. 1,000,000 b. 1,155,000 c. 1,465,000 d. 1,585,000

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter7: Deductions And Losses: Certain Business Expenses And Losses

Section: Chapter Questions

Problem 40P

See similar textbooks

Similar questions

12 The following costs were incurred by ABCDEFGH, Inc.. during 2020: July 1 Organization fees P120,000 July 2 Land site and old building 1,890,000 July 3 Option payments 250,000 July 20 Broker’s fees on property acquired 110,400 July 30 Cost of remodeling the building 60,000 August 30 Salaries of executives 360,000 December 21 Real property taxes 240,000 Additional information: The building acquired had a fair value of P450,000 while the land was currently appraised at P1,800,000 P50,000 of the option money paid were for properties not acquired. The executives had no participation on the remodeling of the building The property taxes were for the 2020 calendar year. How much is the cost of land? Group of answer choices 1,856,320 1,992,320 1,512,000 2,288,000
3. ABC Company has acquired a trademark relating to the introduction of a new manufacturing process. The costs incurred were as follows:Cost of trademark 3, 500, 000Expenditure on promoting the new product 50, 000Employee benefits relating to the testing of the proper functioning of the new process 200, 000What is the total cost that should be capitalized as an intangible noncurrent assets in respect of the new process?
12. On January 1, 2021, ABC Company purchased P600,000, a trademark with an estimated useful life of 16 years. In January 2025, ABC paid P90,000 for legal fees in a successful defense of the trademark. ABC recorded amortization expense for the year ended December 31, 2025, of 45,000. The amount of expense for the year 2025 is overstated or understated by how much? (Sample answer: understated 10,000)
A trademark was purchased from Jordan Company for P120,000 on July 1, 20x1. Expenditures forsuccessful litigation in defense of the trademark totaling P30,000 were paid on July 1, 20x4.Management estimates that the useful life of the trademark will be 20 years from the date of acquisition 8. What is the carrying amount of the trademark on December 31, 20x4?
Ma1. Ford Corporation estimates the fair value of its trademark is estimated to be $560,000. The current carrying value of the trademark on the books is $610,000. Yana expects that over the remaining useful life of the trademark, the trademark will help to generate $620,000 in net cash flows. Does Ford need to make any adjustments at year-end to properly present the trademark on the balance sheet?
______21. The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary costs to get the asset in place and ready for use. ____ 22. An estimate of the amount which an asset can be sold at the end of its useful life is called residual value. ____ 23. Federal unemployment taxes are paid by the employer and the employee. ____ 24. When minor errors occur in the estimates used in the determination of depreciation, the amounts recorded for depreciation expense in the past should be corrected. ____ 25. Residual value is not relevant when calculating the annual depreciation expense using the double declining-balance method (do not consider the calculation for the final year). True and False questions
22.Sponge Co. incurred research and development costs in 2021 as follows: Equipment acquired for use in various research and development projects 975,000 Depreciation on the above equipment 135,000 Materials used 200,000 Compensation costs of personnel 500,000 Outside consulting fees 150,000 Indirect costs appropriately allocated 250,000The total research and development costs charge in Sponge's 2021 statement of profit or loss should be: 850,000 1,085,000 1,235,000 1,825,000
30.The following expenditures were incurred by an entity during 2021. A piece of land with a dilapidated building was acquired and immediately construction of a new building began. Upon completion of the building, the entity acquired several pieces of machinery for use in its operations.Cash paid on purchase of land-P4,500,000Mortgage assumed on the land bought-P5,000,000Legal fees and title verification expenses-P50,000Payment to squatters on the property to vacate the premises -P100,000Demolition costs incurred-P80,000 Proceeds from sale of salvaged materials-P45,000 Paid to contractor for a building erected-P12,000,000Building permit fees-P20,000Excavation expenses-P50,000Architect’s fees-P150,000Capitalized interest cost on building constructed-P18,000 What are the costs of Land and Building, respectively? Apply the principles prior to the amendments to PAS 16 that is effective on January 1, 2022. a. 9,685,000 and 12,238,000 b. 9,650,000 and 12,273,000 c. 9,550,000 and…
36.The following data relate to a piece of equipment owned by Xyza Company, a calendar-year company. The company's policy is to depreciate its property, plant and equipment items to the nearest month.Acquisition date-July 1, 2020 Cost-P125,000 Estimated residual value–P5,000 Estimated service life–5 yearsWhat is the depreciation expense for the equipment for the year ended December 31, 2021 under the -(1) sum-of-the years' digits method and (2) double declining balance method. a. (1) 40,000 and (2) 50,000 b. (1) 36,000 and (2) 40,000 c. (1) 40,000 and (2) 48,000 d. (1) 40,000 and (2) 36,000
PARRISH 8-1 FIXED AND INTANGIBLE ASSETS-ACQUISITION OF ASSETS Please complete the following and explain the how and why of completing 1) identify the cost of the asset 2) For any costs incurred that are not included in the asset cost, specify how they would be recordedGrowth company purchaased a new mahcine for its manufacturing facility. Costs incurred in conjunction with this purchase included the following: Invoice price $90000, subject to 2/10, n/30Sales Tax $5400Freight to ship to Growth $6000Transport to factory $1900Repair of chip in machine from damage in loading $500Training of operators $3600Lunch for truck driver $25
14. Bronze Company operates a production line which is treated as a cash generating unit. At year end, the carrying amounts of the noncurrent assets of the cash generating unit are: Goodwill 1,100,000 Plant and machinery 2,200,000 At year end, the recoverable amount of the production line is estimated at 2,700,000. What are the revised carrying amounts of the goodwill and plant and machinery, respectively?
Po34. Coronado Landscaping Limited has determined that its lawn maintenance division is a cash-generating unit under IFRSThe carrying amounts of the division's assets at December 31, 2023, are as follows : Land $27,000 Building56,000 Equipment36,000 Vehicles19,000 $138,000 The lawn maintenance division has been assessed for impairment and it is determined that the division's value in use is $124,200, fair value less costs to sell is $93,000 , and undiscounted future net cash flows are $162,000.