close solutoin list

During the year-end audit of Cressman Corporation’s financial statements for 2019, you discover the following items: 1. Cressman capitalized $57,000 to the Patent account at the beginning of 2018 for the cost of a patent. This amount included $50,000 of R&D costs. The patent was amortized over a 20-year life in 2018 and 2019. 2. At the beginning of 2018, Cressman paid its lawyers $8,000 to successfully defend a patent infringement suit regarding the patent in Item 1. Cressman debited this cost to Legal Fees Expense. 3. At the beginning of 2019, Cressman purchased a patent for $30,000 from Baylor Company to prevent potential competition. It recorded the cost in the Patent account and amortized this cost over the remaining legal life of the patent obtained in Item 1 (19 years). However, Cressman agreed to a suggestion by the auditors that the life of the original patent obtained in Item 1 was protected for only 7 more years as of the beginning of 2019. Required: Prepare adjusting and correcting journal entries on December 31 for 2019.

BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

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

Solutions

Chapter
Section
Chapter 12, Problem 3P
Textbook Problem

During the year-end audit of Cressman Corporation’s financial statements for 2019, you discover the following items:

  1. 1. Cressman capitalized $57,000 to the Patent account at the beginning of 2018 for the cost of a patent. This amount included $50,000 of R&D costs. The patent was amortized over a 20-year life in 2018 and 2019.
  2. 2. At the beginning of 2018, Cressman paid its lawyers $8,000 to successfully defend a patent infringement suit regarding the patent in Item 1. Cressman debited this cost to Legal Fees Expense.
  3. 3. At the beginning of 2019, Cressman purchased a patent for $30,000 from Baylor Company to prevent potential competition. It recorded the cost in the Patent account and amortized this cost over the remaining legal life of the patent obtained in Item 1 (19 years). However, Cressman agreed to a suggestion by the auditors that the life of the original patent obtained in Item 1 was protected for only 7 more years as of the beginning of 2019.

Required:

Prepare adjusting and correcting journal entries on December 31 for 2019.

Expert Solution

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Solution

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Chapter 12 Solutions

Intermediate Accounting: Reporting And Analysis
Show all chapter solutions
Ch. 12 - Which costs associated with a franchise are...Ch. 12 - What justifies the different treatment given to...Ch. 12 - Over how many years are patents amortized?...Ch. 12 - List four factors that cause the market value of...Ch. 12 - Under what conditions is goodwill capitalized at...Ch. 12 - Under what conditions is purchased goodwill...Ch. 12 - It has been proposed that purchased goodwill...Ch. 12 - What is meant by the term bargain purchase? How is...Ch. 12 - How does the measurement and reporting of impaired...Ch. 12 - Explain how research and development expenditures...Ch. 12 - What is the proper time or time period over which...Ch. 12 - Plaza Company originated late in 2018 and began...Ch. 12 - Frye Company incurred RD costs in 2019 as follows:...Ch. 12 - Which of the following assets typically are...Ch. 12 - Which of the following amounts incurred in...Ch. 12 - A purchased patent has a remaining legal life of...Ch. 12 - During 2015, Traco Machine Company spent 176,000...Ch. 12 - Sherwood Corporation incurred 68,000 of RD costs...Ch. 12 - Goodwill represents the excess of the purchase...Ch. 12 - Flint Corporations general ledger as of December...Ch. 12 - Steel Magnolia Incorporated purchased a trademark...Ch. 12 - Match the following items with correct accounting...Ch. 12 - Notting Hill Company incurred the following costs...Ch. 12 - Hook Corp. incurred the following start-up costs,...Ch. 12 - Mystic Pizza Company purchased a patent from Prime...Ch. 12 - Mystic Pizza Company purchases a franchise from NY...Ch. 12 - Closer Co. incurred and paid the following costs...Ch. 12 - Prepare Closers initial journal entry(s) to record...Ch. 12 - Grand Champion Inc. purchased Americas Sweethearts...Ch. 12 - Using the information from RE12-9, assume that...Ch. 12 - Befort Company filed for a patent on a new type of...Ch. 12 - On January 4, 2019, Franc Company purchased for...Ch. 12 - On January 11, 2019, Hughes Company applied for a...Ch. 12 - Gansac Publishing Company signed a contract with...Ch. 12 - Bouden Company performed the following activities:...Ch. 12 - Danielson Inc. incurred the following costs: a....Ch. 12 - KLK Clothing Company manufactures professional...Ch. 12 - Cressman Company incurred RD costs for various...Ch. 12 - In 2019, Lalli Corporation incurred RD costs as...Ch. 12 - Kling Company was organized in late 2019 and began...Ch. 12 - Barnum Company acquired several small companies at...Ch. 12 - Brush Company engaged in the following...Ch. 12 - Davis Research Company engaged in the following 5...Ch. 12 - Barb Company has provided information on...Ch. 12 - Probst Company acquired a trademark several years...Ch. 12 - In 2019, eGames spent 8,000,000 developing new...Ch. 12 - Company is considering purchasing EKC Company....Ch. 12 - Marino Company had the following balance sheet on...Ch. 12 - Several years ago, Blaha Company purchased Husker...Ch. 12 - Jolis Company has provided information on the...Ch. 12 - Byrd Corporation engaged in the following...Ch. 12 - During the current year, Cartwright Corporations...Ch. 12 - During the year-end audit of Cressman Corporations...Ch. 12 - Halpern Companys controller prepared the following...Ch. 12 - Bailey Company was formed in January 2017 and is...Ch. 12 - Wember Company acquired a subsidiary company on...Ch. 12 - Hamilton Companys balance sheet on January 1,...Ch. 12 - Munn Inc. had the following intangible account...Ch. 12 - Lee Manufacturing Corporation was incorporated on...Ch. 12 - Information concerning Tully Corporations...Ch. 12 - Bryant Corporation was incorporated on December 1,...Ch. 12 - In examining Samson Manufacturing Companys books,...Ch. 12 - Clonal Inc., a biotechnology company, developed...Ch. 12 - Elson Corporation, a retail fuel oil distributor,...Ch. 12 - Some intangible assets that companies may report...Ch. 12 - On June 30, 2019, your client, Sprauge...Ch. 12 - In 1975, a trial was held to settle a tax dispute...Ch. 12 - NBC paid 401 million for the rights to televise...Ch. 12 - You are auditing the financial records of a...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
Why is goal congruence important?

Managerial Accounting: The Cornerstone of Business Decision-Making

MARKET/BOOK RATIO Jaster Jets has 10 billion in total assets. Its balance sheet shows 1 billion in current liab...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)