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Business
AccountingIntermediate Accounting: Reporting And Analysis3rd Edition

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Chapter 12, Problem 1P
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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

Solutions

Chapter
Section
Problem 1GI
Problem 2GI
Problem 3GI
Problem 4GI
Problem 5GI
Problem 6GI
Problem 7GI
Problem 8GI
Problem 9GI
Problem 10GI
Problem 11GI
Problem 12GI
Problem 13GI
Problem 14GI
Problem 15GI
Problem 16GI
Problem 17GI
Problem 18GI
Problem 19GI
Problem 20GI
Problem 1MC
Problem 2MC
Problem 3MC
Problem 4MC
Problem 5MC
Problem 6MC
Problem 7MC
Problem 8MC
Problem 9MC
Problem 10MC
Problem 1RE
Problem 2RE
Problem 3RE
Problem 4RE
Problem 5RE
Problem 6RE
Problem 7RE
Problem 8RE
Problem 9RE
Problem 10RE
Problem 1E
Problem 2E
Problem 3E
Problem 4E
Problem 5E
Problem 6E
Problem 7E
Problem 8E
Problem 9E
Problem 10E
Problem 11E
Problem 12E
Problem 13E
Problem 14E
Problem 15E
Problem 16E
Problem 17E
Problem 18E
Problem 19E
Problem 20E
Problem 1P
Problem 2P
Problem 3P
Problem 4P
Problem 5P
Problem 6P
Problem 7P
Problem 8P
Problem 9P
Problem 10P
Problem 11P
Problem 1C
Problem 2C
Problem 3C
Problem 4C
Problem 5C
Problem 6C
Problem 7C
Problem 8C
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
37 views

Byrd Corporation engaged in the following transactions at the beginning of 2019:

  1. a. Purchased a Hogburger franchise for a 5-year, $60,000, 10% interest-bearing note. The franchise has an indefinite life providing the terms of the franchise are not violated.
  2. b. Sold a trade name for $50,000. The trade name had a carrying value of $5,000.
  3. c. Paid an advertising agency $60,000 for advertisements to promote a new trade name. The advertisements will begin in 2020.
  4. d. Incurred legal fees of $5,000 to register a new trade name.
  5. e. Purchased the copyright to a new movie for $500,000. The movie is made during 2019 at a cost of $15 million. It will begin showing in 2020 and is expected to gross $10 million during 2020, $20 million during 2021, and $10 million during 2022.

Required:

  1. 1. Prepare journal entries to record the preceding transactions, including any appropriate adjusting entries for 2019.
  2. 2. Next Level With regard to the copyright in Transaction e, what factors should Byrd consider in selecting an amortization method.

1.

To determine

Prepare journal entries and necessary adjusting entries for the given transaction of Company B for 2019.

Explanation

Franchise: Franchise is a type of business organization in which the owner (franchisor) grants legal right to an individual or company (franchisee) to sell goods and services of the franchisor, in some particular geographical areas.

Copyright: Copyright is the legal right granted to the writers, musicians, artists, and owners to recreate, or develop their original work. In simple words, it is right to copy by the authors.

Trademark: It is an exclusive right of an entity or business to display its identity of the products or goods through a registered word, symbol, or emblem.

Prepare journal entries for the given transaction of Company B for 2019 as follows:

DateAccounts Title and ExplanationPost Ref.Debit ($)Credit ($)
2019a.Franchise  60,000 
  Notes Payable  60,000
  (To record the purchase of franchise by signing a note )   
      
 b.Cash 50,000 
  Gain on Sale of Trade Name  45,000
  Trade Name  5,000
  (To record the sale of trade name)   
    60,000 
 c.Prepaid Advertising  60,000
  Cash   
  (To record the payment made for advertisement to promote a trade name)   
      
 d.Trade Name 5,000 
  Cash  5,000
  (To record the legal fees incurred to register new trade name)   
      
 e...

2.

To determine

State the factors that the company should consider in selecting an amortization method, in transaction e.

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Ch-12 P-1GICh-12 P-2GICh-12 P-3GICh-12 P-4GICh-12 P-5GICh-12 P-6GICh-12 P-7GICh-12 P-8GICh-12 P-9GICh-12 P-10GI
Ch-12 P-11GICh-12 P-12GICh-12 P-13GICh-12 P-14GICh-12 P-15GICh-12 P-16GICh-12 P-17GICh-12 P-18GICh-12 P-19GICh-12 P-20GICh-12 P-1MCCh-12 P-2MCCh-12 P-3MCCh-12 P-4MCCh-12 P-5MCCh-12 P-6MCCh-12 P-7MCCh-12 P-8MCCh-12 P-9MCCh-12 P-10MCCh-12 P-1RECh-12 P-2RECh-12 P-3RECh-12 P-4RECh-12 P-5RECh-12 P-6RECh-12 P-7RECh-12 P-8RECh-12 P-9RECh-12 P-10RECh-12 P-1ECh-12 P-2ECh-12 P-3ECh-12 P-4ECh-12 P-5ECh-12 P-6ECh-12 P-7ECh-12 P-8ECh-12 P-9ECh-12 P-10ECh-12 P-11ECh-12 P-12ECh-12 P-13ECh-12 P-14ECh-12 P-15ECh-12 P-16ECh-12 P-17ECh-12 P-18ECh-12 P-19ECh-12 P-20ECh-12 P-1PCh-12 P-2PCh-12 P-3PCh-12 P-4PCh-12 P-5PCh-12 P-6PCh-12 P-7PCh-12 P-8PCh-12 P-9PCh-12 P-10PCh-12 P-11PCh-12 P-1CCh-12 P-2CCh-12 P-3CCh-12 P-4CCh-12 P-5CCh-12 P-6CCh-12 P-7CCh-12 P-8C

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