Windsor Industries has the following patents on its December 31, 2024, balance sheet. Patent Item Patent A Patent B Patent C 3. Year The following events occurred during the year ended December 31, 2025. 2026 2027 Initial Cost Date Acquired $42,029 $15,720 $17,280 1. Research and development costs of $236,000 were incurred during the year. 2 Patent D was purchased on July 1 for $47,310. This patent has a useful life of 9¹/2 years. 2028 (a) Expected Future Cash Flows $2,100 2,100 2,100 3/1/21 7/1/22 9/1/23 As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent B's value may have occurred at December 31, 2025. The controller for Windsor estimates the expected future cash flows from Patent B will be as follows. Useful Life at Date Acquired Your answer is incorrect. 17 years 10 years 4 years The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year.) Click here to view factor tables. Total carrying amount $ Compute the total carrying amount of Windsor's patents on its December 31, 2024, balance sheet. (Round answer to 0 decimal places ,e.g. 5,125.)

Windsor Industries has the following patents on its December 31, 2024, balance sheet. Patent Item Patent A Patent B Patent C 3. Year The following events occurred during the year ended December 31, 2025. 2026 2027 Initial Cost Date Acquired $42,029 $15,720 $17,280 1. Research and development costs of $236,000 were incurred during the year. 2 Patent D was purchased on July 1 for $47,310. This patent has a useful life of 9¹/2 years. 2028 (a) Expected Future Cash Flows $2,100 2,100 2,100 3/1/21 7/1/22 9/1/23 As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent B's value may have occurred at December 31, 2025. The controller for Windsor estimates the expected future cash flows from Patent B will be as follows. Useful Life at Date Acquired Your answer is incorrect. 17 years 10 years 4 years The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year.) Click here to view factor tables. Total carrying amount $ Compute the total carrying amount of Windsor's patents on its December 31, 2024, balance sheet. (Round answer to 0 decimal places ,e.g. 5,125.)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 3P

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Oz Corporation has the following assets at year-end: Patents (net), 26,000; Land, 50,000; Buildings, 175,000; Accumulated Depreciation: Buildings, 57,500; Investment in Held-to-Maturity Bonds, 12,000; Equipment, 95,000; and Accumulated Depreciation: Equipment, 25,000. Prepare the property, plant, and equipment section of Ozs year-end balance sheet.
On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was estimated at 2,000. The equipment will be depreciated over 10 years using the double-declining balance method. Counting the year of acquisition as one-half year, Mundo should record 2019 depredation expense of: a. 7,680 b. 9,000 c. 9,600 d. 10,000
On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
During 2019, Ryel Companys controller asked you to prepare correcting journal entries for the following three situations: 1. Machine A was purchased for 50,000 on January 1, 2014. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 25,000. The estimated residual value remains at 5,000, but the service life is now estimated to be 1 year longer than estimated originally. 2. Machine B was purchased for 40,000 on January 1, 2017. It had an estimated residual value of 5,000 and an estimated service life of 10 years. it has been depreciated under the double-declining-balance method for 2 years. Now, at the beginning of the third year, Ryel has decided to change to the straight-line method. 3. Machine C was purchased for 20,000 on January 1, 2018, Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value of the machine is 2,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry necessary for each situation to record depreciation expense for 2019.
Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual value was 500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month. Required: 1. Compute depredation expense (rounded to the nearest dollar) for 2019 and 2020 using the: a. straight-line method b. sum-of-the-years-digits method c. double-declining-balance method 2. Next Level Which method produces the highest book value at the end of 2020? 3. Next Level Which method produces the highest charge to income in 2020? 4. Next Level Over the life of the asset, which method produces the greatest amount of depreciation expense?
Mystic Pizza Company purchased a patent from Prime Pizza Plus on January 1, 2019, for 72,000. The patent has a remaining legal life of 9 years. Prepare the journal entries to record the acquisition and the amortization for 2019, assuming Mystic Pizza amortizes its patents using the straight-line method over the life of the asset.