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Intermediate Accounting: Reporting...

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

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Hook Corp. incurred the following start-up costs, all paid in cash:

Chapter 12, Problem 4RE, Hook Corp. incurred the following start-up costs, all paid in cash: Prepare Hooks journal entry to

Prepare Hook’s journal entry to record the start-up costs, all paid in cash.

To determine

Record the start-up costs of Company H in a journal format.

Explanation

Intangible assets: These are the long-term assets which are not physical in nature, but possess value. The intangible assets would be amortized over their definite useful life or limited useful life, and those with indefinite or unlimited lives are not amortized.

Record the start-up costs of Company H in a journal format:

DateAccounts Title and ExplanationPost Ref.Debit ($)Credit ($)
 Start-up costs (1) 138,000 
 Cash  138,000
 (To record the start-up costs paid during the year)   

Table (1)

  • Start-up costs are an expense incurred by the business and it decreases the value of stockholders’ equity. Therefore, debit start-up cost account with $138,000...

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