INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
9th Edition
ISBN: 9781260180657
Author: SPICELAND
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 11.19E
To determine
Amortization:
Itis the process of allocating the value of an intangible asset over its definite useful life.
Intangible Assets:
These are the long-term assets having no physical existence. However, the benefits provided by these assets are used by the company for a long period of time. Example: Patent, trademark,
To prepare: The
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Current Attempt in Progress
Pharoah Company incurred $890000 of research and development costs in its laboratory to develop a new product. It spent
$150000 in legal fees for a patent granted on January 2, 2022. On July 31, 2022, Pharoah paid $90000 for legal fees in a
successful defense of the patent. What is the total amount that should be debited to Patents through July 31, 2022?
O $0.
$240000.
$890000.
O $1130000.
ABC Co. purchased a patent on January 1, 2018 for P300,000. The patent was being amortized over its remaining legal life of 15 years. During 2020, ABC Co. determined that the economic benefits of the patent would not last longer than 10 years from the date of acquisition. What amount should be charged to patent amortization expense for the year ended December 31 2020?a. 32,500b. 26,000c. 20,000
d. 17,333
e. answer not given
Exercise 11-21 (Algo) Change in estimate; useful life of patent [LO11-4, 11-5)
Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the patent on a straight-
line basis since 2020, when it was acquired at a cost of $13.5 million at the beginning of that year. Due to rapid technological advances
in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life
being used to amortize its cost. The decision was made at the beginning of 2024.
Required:
Prepare the year-end journal entry for patent amortization in 2024. No amortization was recorded during the year.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answer
in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.5).
Chapter 11 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
Ch. 11 - Prob. 11.1QCh. 11 - Depreciation is a process of cost allocation, not...Ch. 11 - Identify and define the three characteristics of...Ch. 11 - Discuss the factors that influence the estimation...Ch. 11 - What is meant by depreciable base? How is it...Ch. 11 - Prob. 11.6QCh. 11 - Prob. 11.7QCh. 11 - Why are time-based depreciation methods used more...Ch. 11 - Prob. 11.9QCh. 11 - Prob. 11.10Q
Ch. 11 - Briefly explain the differences and similarities...Ch. 11 - Prob. 11.12QCh. 11 - Prob. 11.13QCh. 11 - What are some of the simplifying conventions a...Ch. 11 - Explain the accounting treatment required when a...Ch. 11 - Explain the accounting treatment and disclosures...Ch. 11 - Explain the steps required to correct an error in...Ch. 11 - Prob. 11.18QCh. 11 - Prob. 11.19QCh. 11 - Prob. 11.20QCh. 11 - Prob. 11.21QCh. 11 - Briefly explain the differences between U.S. GAAP...Ch. 11 - Under U.S. GAAP, litigation costs to successfully...Ch. 11 - Cost allocation At the beginning of its fiscal...Ch. 11 - Depreciation methods LO112 On January 1, 2018,...Ch. 11 - Depreciation methods; partial periods LO112 Refer...Ch. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.6BECh. 11 - Group depreciation; disposal LO112 Mondale Winery...Ch. 11 - Prob. 11.8BECh. 11 - Prob. 11.9BECh. 11 - Prob. 11.10BECh. 11 - Change in principle; change in depreciation method...Ch. 11 - Prob. 11.12BECh. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - Prob. 11.14BECh. 11 - IFRS; impairment; property, plant, and equipment ...Ch. 11 - Prob. 11.16BECh. 11 - Prob. 11.17BECh. 11 - IFRS; impairment; goodwill LO1110 IFRS Refer to...Ch. 11 - Subsequent expenditures LO119 Demmert...Ch. 11 - Depreciation methods LO112 On January 1, 2018,...Ch. 11 - Prob. 11.2ECh. 11 - Depreciation methods; partial periods LO112 [This...Ch. 11 - Depreciation methods; asset addition; partial...Ch. 11 - Depreciation methods; solving for unknowns LO112...Ch. 11 - Depreciation methods; partial periods LO112 On...Ch. 11 - Prob. 11.7ECh. 11 - IFRS; depreciation; partial periods LO112, LO1110...Ch. 11 - IFRS; revaluation of machinery; depreciation;...Ch. 11 - Disposal of property, plant, and equipment LO112...Ch. 11 - Disposal of property, plant, and equipment;...Ch. 11 - Depreciation methods; disposal; partial periods ...Ch. 11 - Group depreciation LO112 Highsmith Rental Company...Ch. 11 - Double-declining-balance method; switch to...Ch. 11 - Prob. 11.15ECh. 11 - Prob. 11.16ECh. 11 - Cost of a natural resource; depletion and...Ch. 11 - Prob. 11.18ECh. 11 - Prob. 11.19ECh. 11 - Prob. 11.20ECh. 11 - Prob. 11.21ECh. 11 - Change in estimate; useful life and residual value...Ch. 11 - Change in principle; change in depreciation...Ch. 11 - Change in principle; change in depreciation...Ch. 11 - Prob. 11.25ECh. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - IFRS; impairment; property, plant, and equipment ...Ch. 11 - IFRS; Impairment; property, plant, and equipment ...Ch. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - Prob. 11.30ECh. 11 - IFRS; impairment; goodwill LO1110 IFRS Refer to...Ch. 11 - Prob. 11.32ECh. 11 - FASB codification research LO118 The FASB...Ch. 11 - Prob. 11.34ECh. 11 - Subsequent expenditures LO119 Belltone Company...Ch. 11 - Prob. 11.36ECh. 11 - Concept s; terminology LO111 through LO116, LO118...Ch. 11 - Retirement and replacement depreciation Appendix...Ch. 11 - Depreciation methods; change in methods LO112,...Ch. 11 - Prob. 11.2PCh. 11 - Depreciation methods; partial periods Chapters 10...Ch. 11 - Partial- year depreciation; asset addition;...Ch. 11 - Prob. 11.5PCh. 11 - Prob. 11.6PCh. 11 - Prob. 11.7PCh. 11 - Prob. 11.8PCh. 11 - Straight-line depreciation; disposal; partial...Ch. 11 - Prob. 11.10PCh. 11 - Prob. 11.11PCh. 11 - Prob. 11.12PCh. 11 - Depreciation and depletion; change in useful life;...Ch. 11 - Analysis Case 111 Depreciation, depletion, and...Ch. 11 - Communication Case 112 Depreciation LO111 At a...Ch. 11 - Judgment Case 113 Straight-line method; composite...Ch. 11 - Prob. 11.4BYPCh. 11 - Prob. 11.5BYPCh. 11 - Prob. 11.7BYPCh. 11 - Prob. 11.8BYPCh. 11 - Research Case 119 FASB codification; locate and...Ch. 11 - Ethics Case 1110 Asset impairment LO118 At the...Ch. 11 - Prob. 11.11BYPCh. 11 - Prob. 11.13BYPCh. 11 - Real World Case 1114 Disposition and depreciation;...Ch. 11 - Real World Case 1115 Depreciation and depletion...Ch. 11 - Prob. 11.16BYPCh. 11 - Target Case LO112, LO118, LO119 Target...
Knowledge Booster
Similar questions
- View Policies Current Attempt in Progress Monty Engineering purchases a patent for R$139,200 on January 2, 2025. Its estimated useful life is 8 years. (a) Prepare the journal entry to record amortization expense for the first year. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit (b) Show how this patent is reported on the statement of financial position at the end of the first year. MONTY ENGINEERING Statement of Financial Position (Partial) R$ Creditarrow_forwardR Company registered a patent on January 1, 2015. P Company purchased the patent from R Company for $450,000 on January 1, 2020, and began to amortize the patent over its remaining legal life. In early 2021, P Company determined that the patent's economic benefits would last only until the end of 2025. What amount should P Company record for patent amortization in 2021? $30,000 $70,000 $90,000 $84,000arrow_forwardCurrent Attempt in Progress Cullumber Company incurred research and development costs of $89000 to develop a patent, and legal fees of $29000 to register the patent. The patent has a legal life of 20 years and a useful life of 10 years. What amount should Cullumber record as Patent Amortization Expense in the first year if the straight-line method is used? O $5900 O $2900 O $11800 O $0arrow_forward
- Problem 1: Intangible Example 1 Patent Pizza the Action purchases a patent from On a Roll on January 1, 2018 for $64,000. The patent has a remaining legal life of 16 years. Pizza the Action feels the patent will be useful until the end of 2027. Prepare Pizza the Action's journal entries to record the purchase and 2018 amortization. I In January 2020, Pizza the Action spends $26,000 successfully defending a patent suit. Pizza the Action still feels the patent will be useful until the end of 2027. Prepare the entries to record the $26,000 expenditure and the 2020 amortization. Assume instead that in January 2020, Pizza the Action spends $26,000 to defend its patent but they are UNSUCCESSFUL and the patent is deemed useless. Prepare the necessary entries. Be sure to include the dates these entries will be written.arrow_forwardEmail Problem 32-18 (IAA) Harmonious Company acquired a patent for a drug with a remaining legal and useful life of six years on January 1, 2018 for 5,400,000. The entity used straight line amortization. On January 1, 2020, a new patent is received for an improved version of the same drug: The new patent has a legal and useful life of twenty years. What is the amount of amortization expense for 2020? a 900,000 b. 200,000 180,000 d. 300,000 C.arrow_forwardMC32 Jade Company spent P200,000 on research and development cost for an invention during 2014. On January 1, 2015, the invention was patented at a nominal cost that was expensed in 2015. The legal life of the patent was 15 years and the estimated useful life was 9 years. In January 2019, Jade paid P250,000 for legal fees in a successful defense of the patent. What should be the amortization expense for 2019? a. PO P22,730 P27,780 P50,000 b. c. d. incurred the following costs during 2019:arrow_forward
- Question 15 options: 8-6b(1). Use of asset. Farmacy Stuff bought a patent for a great medical cure for $15,000 on May 1, 2014. The patent has a remaining life of 5 years and will be amortized using the straight-line method. Farmacy closes its books on December 31. Calculate the amount of amortization expense on the intangible asset for 2015 (round to nearest dollar; do not use "$" or commas in your answer)arrow_forwardAccouting Current Attempt in Progress Blossom Company purchases a patent for $158,000 on January 2, 2025. Its estimated useful life is 8 years. (a) Prepare the journal entry to record amortization expense for the first year. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (b) Show how this patent is reported on the balance sheet at the end of the first year. Blossom Company Balance Sheet (Partial)arrow_forwardProblem 32-15 (AICPA Adapted) Brazen Company purchased a patent on January 1, 2015 for P6.000,000. The original life of the patent was estimated to be 15 years. However, in December 2020, the controller received information proving conclusively that the product protected by the patent would be obsolete within four years. The entity decided to write off the unamortized portion of the patent cost over five years beginning in 2020. What is the patent amortization for 2020? 1,200,000 b. a. 1,000,000 800,000 400,000 с. d.arrow_forward
- Exercise 12-04 Presented below is selected information for Carla Vista Company. Answer the questions asked about each of the factual situations. (Do not leave any answer field blank. Enter 0 for amounts.) 1. Carla Vista purchased a patent from Vania Co. for $1,290,000 on January 1, 2018. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2028. During 2020, Carla Vista determined that the economic benefits of the patent would not last longer than 6 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2020? The amount to be reported 2. Carla Vista bought a franchise from Alexander Co. on January 1, 2019, for $395,000. The carrying amount of the franchise on Alexander's books on January 1, 2019, was $395,000o. The franchise agreement had an estimated useful life of 30 years. Because Carla Vista must enter a competitive bidding at the end of 2021,…arrow_forwardAt December 31, 2020, Green company had three existing patents shown below: Date Acquired February 14, 2016 January 3, 2019 July 1, 2019 Useful life 8 years 10 years 5 years Cost Patent A Patent B Patent C P 150,000 210,250 72,000 During 2021, the company had the following transactions and assessments: • Due to the emerging competition relating to the product being manufactured in Patent A, it is expected that the right will be useful only in 2021 and 2022. • Patent B is believe to be uniquely useful as long as the company retains the right to use it. • On June 1, 2021, the company unsuccessfully attempted to defend its right to Patent C. Legal fees of P15,000 was incurred in this action. The asset was immediately derecognized in the accounts. The company's policy is to take full year amortization in the year of acquisition and no amortization in the year of derecognition using straight-line method. How much is the amortization of patent for the year 2021?arrow_forwardQ 9.28: Aqua Marine Corporation purchases a patent at a cost of $120,000 on June 30, 2020. The company estimates the useful life of the patent to be 10 years. The journal entry to record amortization for the 6- month period ended December 31, 2020, includes a debit to Patent Expense of $12,000 and credit to Accumulated Amortization of $12,000. debit to Amortization Expense of $12,000 and credit to Patents of $12,000. C debit to Amortization Expense of $6,000 and credit to Patents of $6,000. debit to Amortization Expense of $12,000 and credit to Accumulated Amortization of $12,000. A B Darrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning