Stephan Curry, Inc., spent $68,000 in attorney fees while developing the trade name of its new product, the Mean Bean Machine. Prepare the journal entries to record the $68,000 expenditure and the first year's amortization, using an 8-year life.
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Stephan Curry, Inc., spent $68,000 in attorney fees while developing the trade name of its new product, the Mean Bean Machine. Prepare the
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- For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.Calico Inc. purchased a patent on a new drug it created. The patent cost $12,000. The patent has a life of twenty years, but Calico expects to be able to sell the drug for fifty years. Calculate the amortization expense and record the journal for the first years expense.Calico Inc. purchased a patent on a new drug. The patent cost $21,000. The patent has a life of twenty years, but Calico only expects to be able to sell the drug for fifteen years. Calculate the amortization expense and record the journal for the first-year expense.
- Paulman incurred $58,000 of research and experimental expenses and began amortizing them over 60 months during June of Year 1. During May of Year 3, Paulman received a patent based upon the research being amortized. $39,000 of legal expenses for the patent were incurred. The patent is expected to have a remaining useful life of 17 years. 1) What is the basis of the patent? (Round amortization for each year to the nearest whole number.) 2) What is the amortization deduction with respect to the patent during the year it was issued? (Round final answer to the nearest whole number.)For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.A small industrial contractor purchased a warehouse building for storing equipment and materials that are not immediately needed at construction job sites. The cost of the building was $100,000 and the contractor has just made an agreement with the seller to finance the purchase over a 5-year period. The agreement states that monthly payments will be made based on a 30-year repayment schedule of interest on the unrecovered balance of the principal; however, the total remaining balance of principal and interest at the end of year 5 must be paid in a lump-sum “balloon” payment. What is the size of the balloon payment, if the interest rate on the loan is 0.5% per month?
- Englehard purchases a slurry-based separator for the mining of clay that costs $700,000 and has an estimated useful life of 10 years, a MACRS-GDS property class of 7 years, and an estimated salvage value after 10 years of $75,000. It was financed using a $200,000 down payment and a loan of $500,000 over a period of 5 years with interest at 10%. Loan payments are made in equal annual amounts (principal plus interest) over the 5 years. a. What is the amount of the MACRS-GDS depreciation taken in the 3rd year? b. What is the book value at the end of the 3rd year? c. Returning to the original situation, what is the amount of the MACRSGDS depreciation taken in the 3rd year if the separator is also sold during the 3rd year?On May 1, Jack Costanza paid $100,000 for a residential rental property. This purchase price represents $80,000 for the cost of the building and $20,000 for the cost of the land. Nine years and five months later, on October 1, he sold the property for $130,000. Compute the MACRS depreciation for each of the 10 calendar years during which he owned the property.Happy Timber, Inc. owns timberland that is used to supply firewood. The timberland was purchased for $480,000 of which $125,000 relates to the land itself, and it is expected to produce 1,000,000 total pieces of firewood over the next 5 years. If 75,000 pieces of firewood are cut and sold during the year, prepare the journal entries for the depletion and sale of the firewood. *Note: should have two iournal entries.
- Holly Springs, Incorporated contracted with Coldwater Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2024. Holly Springs paid for the lathe by issuing a $300,000 note due in three years. Interest, specified at 2%, was payable annually on December 31 of each year. The cash market price of the lathe was unknown. It was determined by comparison with similar transactions for which 6% was a reasonable rate of interest. Holly Springs uses the effective interest method of amortization. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required:1.Prepare the journal entry on January 1, 2024, for Holly Springs’ purchase of the lathe. 2.Prepare an amortization schedule for the three-year term of the note. 3.Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity.XYZ Corporation bought a machine on January 1, 20x2. In purchasing the machine, the company paid ₱50,000 cash and signed an interest-bearing note for ₱100,000. The estimated useful life of the machine is five years, after which time the residual value is expected to be ₱15,000. Given this information, how much depreciation expense would be recorded for the year ending December 31, 20x3 if the company uses the sum-of-the-years'-digits depreciation method? 45,000 c. 36,000 40,000 d. 34,000Bilmoco Company purchased a new machine on a deferred payment basis. A down-payment of P100,000 was made and 4 monthly installments of P250,000 are to be made at the end of each month. The cash equivalent price of the machine was P950,000. The entity incurred and paid installation costs amounting to P30,000. What is the amount to be capitalized as cost of the machine?