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 11.8P
Requirement – 1
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 year-end
Requirement – 2
To determine
To prepare: The intangible assets section of
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Exercise 11-19 (Algo) Amortization [LO11-4, 11-5]
Janes Company provided the following information on intangible assets:
a. A patent was purchased from the Lou Company for $1,400,000 on January 1, 2019. Janes estimated the remaining useful life of the
patent to be 10 years. The patent was carried on Lou's accounting records at a net book value of $490,000 when Lou sold it to
Janes.
b. During 2021, a franchise was purchased from the Rink Company for $640,000. The contractual life of the franchise is 10 years and
Janes records a full year of amortization in the year of purchase.
C. Janes incurred research and development costs in 2021 as follows:
Materials and supplies
$154,000
194,000
74,000
Personne1
Indirect costs
Total
$422,000
d. Effective January 1, 2021, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased
from Lou is only five more years.
Required:
1. Prepare the entries necessary for years 2019 through 2021 to reflect the above…
Exercise 11-19 (Algo) Amortization [LO11-4, 11-5]
Janes Company provided the following information on intangible assets:
a. A patent was purchased from the Lou Company for $1,350,000 on January 1, 2019. Janes estimated the remaining useful life of the
patent to be 10 years. The patent was carried on Lou's accounting records at a net book value of $480,000 when Lou sold it to
Janes.
b. During 2021, a franchise was purchased from the Rink Company for $630,000. The contractual life of the franchise is 10 years and
Janes records a full year of amortization in the year of purchase.
c. Janes incurred research and development costs in 2021 as follows:
Materials and supplies.
Personnel
Indirect costs
Total
d. Effective January 1, 2021, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased
from Lou is only five more years.
$153,000
193,000
73,000
$419,000
Required:
1. Prepare the entries necessary for years 2019 through 2021 to reflect the above…
15
Clegane Company had the following acquisitions of intangible assets in 2022:
Franchise
On January 31, 2022, Clegane signed an agreement to operate as franchisee of Clear Copy Service, Inc. for an initial franchise of P780,000. Of this amount, P300,000 was paid when the agreement was signed and the balance was payable in four annual payments of P120,000 each, beginning January 31, 2023. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The implicit rate for loan of this type is 12%. The agreement also provides the 1.5% of the revenue from the franchise must be paid to the franchisor annually. Clegane’s revenue from the franchise in 2022 was P9,500,000. Clegane estimates the useful life of the franchise to be ten years. At the end of 2022, the franchise recoverable amount was P610,000.
Trademark
On March 1, 2022 Clegane purchased for P400,000 a trademark for a very successful soft drink it markets under the name…
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
- 12 The goodwill of Dolly Company was due to the acquisition of Puppy on December 1, 2022. The carrying amount and fair value of the assets and liabilities of Puppy as of the date of acquisition were as follows: Accounts Carrying Amount Fair Value Cash P50,000 P50,000 Accounts receivable 500,000 500,000 Inventory 1,000,000 1,500,000 Investment property 0 350,000 Property, plant and equipment 2,000,000 3,150,000 Liabilities 2,000,000 2,000,000 The bookkeeper of Dolly recorded goodwill at the excess of purchase price over the book value of the net assets of Puppy at P1,850,000. How much should Dolly Company report goodwill as of December 31, 2022?arrow_forwardHw.27. Entity A entered into a sale and repurchase agreement for its head office on 1 January 2022, selling the office to Bank B for $78,560,000. On the same date, the head office had a fair value of $97,800,000. Entity A will continue to use the head office for the next 2 years and has the option to buy back the property for $93,765,779, based on an effective interest rate of 9.25% per year over the next 2 years. Property prices are expected to increase over the next 2 years. REQUIRED: Measure the net amount to be shown in the Statement of Profit or Loss for the year ended 31 December 2022. 1. $7,938,979 Expense 2. $19,240,000 Expense 3. $0 4. $7,266,800 Expense 5. None of them.arrow_forwarde amortization Intangible Assets 457 PROBLEM 3: EXERCISES 1. Big Publisher Co. has a publishing contract with Mr. Juan Lapis. An intangible asset for the publishing title is recognized on the contract. The carrying amount is P4,400,000. Bigger Publisher Co. has a similar publishing contract with Ms. Jane Ballpen. The carrying amount is P4,200,000. Big traded the publishing title with Lapis to Bigger for that of Ballpen. The fair value of each contract was P4,500,000. Requirement: Provide the entries in each of Big and Bigger's books under each of the following scenarios: a. The exchange transaction lacks commercial substance. b. The exchange transaction has commercial substance. (Adapted) 2. Coffee Co. incurred P5,000,000 on a self-created computer software, P2,100,000 of which was incurred after technological feasibility was established. The software is expected to have a 3-year economic life and generate future revenues of P35,000,000. The revenue generated by the software during the…arrow_forward
- a. On January 1, 2024, UTS completed the purchase of Heinrich Corporation for $3,153,000 in cash. The fair value of the net Identifiable assets of Heinrich was $2,850,000. b. Included in the assets purchased from Heinrich was a patent valued at $91,200. The original legal life of the patent was 20 years; there are 12 years remaining, but UTS believes the patent will be useful for only eight more years. c. UTS acquired a franchise on July 1, 2024, by paying an initial franchise fee of $356,000. The contractual life of the franchise is 10 years. Required: 1. Record amortization expense for the Intangible assets at December 31, 2024. 2. Prepare the intangible asset section of the December 31, 2024, balance sheet. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the intangible asset section of the December 31, 2024, balance sheet.arrow_forward1. Entity A, a government entity, acquires a machine for $10,000 on November 1, 20x1, on account, and settles the account on January 3, 20x2. The machine is estimated to have a useful life of 5 years and a residual value of 5% of cost. Entity A uses the straight line method of depreciation. The exchange rates are as follows. November 1, 20x1 $1 P50 December 31 20x1 $1 P40 January 3 20x2 $1P45 How much is the net foreign exchange gain (loss) recognized in surplus or deficit from the transaction?| a. P10.000 C. (P5 000) b. (P10,000) d. P5000arrow_forward= ces On March 31, 2024, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,000,000 in cash. The book values and fair values of Barney's assets and liabilities were as follows: Current assets Property, plant, and equipment Other assets Current liabilities Long-term liabilities. Required: Calculate the amount paid for goodwill. Goodwill Book Value $ 6,000,000 11,000,000 1,000,000 4,000,000 6,000,000 Fair Value $ 7,500,000 14,000,000 1,500,000 4,000,000 5,500,000arrow_forward
- Exercise 10-3 (Algo) Acquisition costs; lump-sum acquisition [LO10-1, 10-2] Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.7 and $1.3 million, respectively. Shortly after acquisition, Samtech spent $85,000 to construct a parking lot and $43,000 for landscaping. Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions. 2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $280,000 and the salvaged materials were sold for $7,500. In addition, Samtech spent $82,000…arrow_forwardExercise 10-3 (Algo) Acquisition costs; lump-sum acquisition [LO10-1, 10-2] Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.7 and $1.3 million, respectively. Shortly after acquisition, Samtech spent $85,000 to construct a parking lot and $43,000 for landscaping. Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions. 2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $280,000 and the salvaged materials were sold for $7,500. In addition, Samtech spent $82,000…arrow_forward4 Bella Inc. has invested in a piece of land on January 1, 2022. The company uses the revaluation model for its land, and the revaluation takes place annually. 5 6 7 More information about the land acquisition cost and fair values is provided below: 8 January 1, 2022 Acquisition cost 519000 paid for in cash 9 December 31, 2022 Fair value 532000 10 December 31, 2023 Fair value 535000 Fair value 529000 11 December 31, 2024 12 13 During June 2025, the company sold the land for 14 0 1 2 3 15 Required 16 Prepare all journal entries related to the land from January 1, 2022 to June 2025, assuming the asset adjustment method is used. 17 18 Enter your answer here: 9 534000 45arrow_forward
- 2. Center Company acquired three intangible assets before 2020. The entity is preparing financial statements on December 31, 2020. Before that date, no formal financial statements had been prepared and the cost of intangible assets had been charged to operations when acquired. The following intangible assets were accounted for in this manner. Acquisition date January 1, 2016 July 1, 2017 January 1, 2018 Useful life Cost Copyright 1 Copyright 2 400,000 360,000 500,000 20 15 Patent 10 Required: Compute the total carrying amount of Intangible asset on December 31,2020. 3. At the beginning of current year, Outlandish Company entered into a franchise agreement with Jollibee Company to sell - Jollibee products for an indefinite period. The agreement provides for an initial fee of P20,000,000, P5,000,000 down upon signing of the contract and the balance in four equal annual payments every year-end. The entity signed 10% interest-bearing note for the balance. The collection of the note is…arrow_forwardTCO C) Floyd Company purchases Haeger Company for $800,000cash on January 1, 2011. The book value of Haeger Company’s netassets, as reflected on its December 31, 2010 balance sheet, is$620,000. An analysis by Floyd on December 31, 2010 indicates thatthe fair value of Haeger’s tangible assets exceeded the book valueby $60,000, and the fair value of identifiable intangible assetsexceeded book value by $45,000. How much goodwill should berecognized by Floyd Company when recording the purchase of HaegerCompany?arrow_forwardProblem 7-6A (Algo) Record amortization and prepare the intangible assets section (LO7-5) The following information relates to the intangible assets of University Testing Services (UTS): a. On January 1, 2024, UTS completed the purchase of Heinrich Corporation for $3,306,000 in cash. The fair value of the net identifiable assets of Heinrich was $3,000,000. b. Included in the assets purchased from Heinrich was a patent valued at $92,400. The original legal life of the patent was 20 years; there are 12 years remaining, but UTS believes the patent will be useful for only eight more years. c. UTS acquired a franchise on July 1, 2024, by paying an initial franchise fee of $362,000. The contractual life of the franchise is 10 years. Required: 1. Record amortization expense for the intangible assets at December 31, 2024. 2. Prepare the intangible asset section of the December 31, 2024, balance sheet. Complete this question by entering your answers in the tabs below. Required: Required 2…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT