Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 2, Problem 3TP
A trademark is an intangible asset that has value to a business. Assume that you are an accountant with the responsibility of valuing the trademark of a well-known company such as Nike or McDonald’s. What makes each of these companies unique and adds value? While the value of a trademark may not necessarily be recorded on the company’s
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A trademark is an intangible asset that has value to a business. Assume that you are an accountant with the responsibility of valuing the trademark of a well-known company such as Nike or McDonald’s. What makes each of these companies unique and adds value? While the value of a trademark may not necessarily be recorded on the company’s balance sheet. Discuss what factors you think would affect (increase or decrease) the value of the company’s trademark? Consider your answer from the perspective of various stakeholders.
How do accounting standards and practices vary when accounting for intangible assets, such as patents, trademarks, and copyrights, and what challenges do companies face in accurately valuing and reporting these assets on their financial statements, especially in industries heavily reliant on intellectual property, like technology and entertainment?"
Negative Goodwill is based on the accounting concept of Goodwill, an intangible asset that represents the worth of a company's brand name, patents and other intellectual19property, customer base, licenses, and other items that are difficult to put an amount on but help to make a company valuable. When the price paid is less than the actual value of the company's net tangible assets, negative Goodwill results.Required: In accordance with IFRS 3: Business Combinations, Identify THREE (3) factors that account for a negative Goodwill and indicate its accounting treatment when it occurs in the preparation of consolidated financial statements.
Chapter 2 Solutions
Principles of Accounting Volume 1
Ch. 2 - Which of these statements is not one of the...Ch. 2 - Stakeholders are less likely to include which of...Ch. 2 - Identify the correct components of the income...Ch. 2 - The balance sheet lists which of the following? A....Ch. 2 - Assume a company has a $350 credit (not cash)...Ch. 2 - Which of the following statements is true? A....Ch. 2 - Owners have no personal liability under which...Ch. 2 - The accounting equation is expressed as ________....Ch. 2 - Which of the following decreases owners equity? A....Ch. 2 - Exchanges of assets for assets have what effect on...
Ch. 2 - All of the following increase owners equity except...Ch. 2 - Which of the following is not an element of the...Ch. 2 - Which of the following is the correct order of...Ch. 2 - The three heading lines of financial statements...Ch. 2 - Which financial statement shows the financial...Ch. 2 - Which financial statement shows the financial...Ch. 2 - Working capital is an indication of the firms...Ch. 2 - Identify the four financial statements and...Ch. 2 - Define the term stakeholders. Identify two...Ch. 2 - Identify one similarity and one difference between...Ch. 2 - Identify one similarity and one difference between...Ch. 2 - Explain the concept of equity, and identify some...Ch. 2 - Explain the difference between current and...Ch. 2 - Identify/discuss one similarity and one difference...Ch. 2 - Name the three types of legal business structure....Ch. 2 - What is the accounting equation? List two examples...Ch. 2 - Identify the order in which the four financial...Ch. 2 - Explain how the following items affect equity:...Ch. 2 - Explain the purpose of the statement of cash flows...Ch. 2 - For each independent situation below, calculate...Ch. 2 - For each independent situation below, calculate...Ch. 2 - For each independent situation below, calculate...Ch. 2 - For each independent situation below, place an (X)...Ch. 2 - For each of the following items, identify whether...Ch. 2 - For the items listed below, indicate how the item...Ch. 2 - Forest Company had the following transactions...Ch. 2 - Here are facts for the Hudson Roofing Company for...Ch. 2 - Prepare an income statement using the following...Ch. 2 - Prepare a statement of owners equity using the...Ch. 2 - Prepare a balance sheet using the following...Ch. 2 - For each independent situation below, calculate...Ch. 2 - For each independent situation below, calculate...Ch. 2 - For each independent situation below, calculate...Ch. 2 - For each of the following independent situations,...Ch. 2 - For each of the following items, identify whether...Ch. 2 - For the items listed below, indicate how the item...Ch. 2 - Gumbo Company had the following transactions...Ch. 2 - Here are facts for Haileys Collision Service for...Ch. 2 - Prepare an income statement using the following...Ch. 2 - Prepare a statement of owners equity using the...Ch. 2 - Prepare a balance sheet using the following...Ch. 2 - The following information is taken from the...Ch. 2 - Each situation below relates to an independent...Ch. 2 - The following information is from a new business....Ch. 2 - Each of the following situations relates to a...Ch. 2 - For each of the following independent...Ch. 2 - Olivias Apple Orchard had the following...Ch. 2 - Using the information in PA6, determine the amount...Ch. 2 - The following ten transactions occurred during the...Ch. 2 - The following information is taken from the...Ch. 2 - Each situation below relates to an independent...Ch. 2 - The following information is from a new business....Ch. 2 - Each of the following situations relates to a...Ch. 2 - For each of the following independent...Ch. 2 - Mateos Maple Syrup had the following transactions...Ch. 2 - Using the information in PB6, determine the amount...Ch. 2 - Choose three stakeholders (or stakeholder groups)...Ch. 2 - Assume you purchased ten shares of Roku during the...Ch. 2 - A trademark is an intangible asset that has value...Ch. 2 - For each of the following ten independent...Ch. 2 - The following historical information is from...
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Similar questions
- A copyright is issued when a firm uses identifying words, names or symbols on its product to distinguish its good from those of other firms. True or Falsearrow_forwardWhich of the following is a type of intangible business property that is legally protected? Select one: a. Land and equipment. b. Stock and Inventory. c. Acres. d. Jane’s registered symbol and design for her hair gel. What factors should businesses consider when determining financing needs to determine whether they can repay the debt? Select one: a. Inventory b. Equity c. Depreciation d. Liquidity The most successful businesses do not have well-defined portraits of the customers they are seeking to attract. Select one: True False Which of the following is an example of how an entrepreneur might use marketing information? Select one: a. To create surveys. b. To carry out research. c. To forecast change. d. To examine and analyze data.arrow_forwardThe legal protection that provides a company exclusive rights to produce and sell a unique product is known as which of the following? A. trademark B. copyright C. patent D. goodwillarrow_forward
- When an individual invents a product that could potentially have commercial value, it needs to be protected. This activity is important because it looks at different ways people can protect their ideas, also known as intellectual property. The goal of this activity is to for you to differentiate among the different types of intellectual property protections. Select the most appropriate category of protection for each listed intellectual property. 1. Aflac Duck Trademark O Patent O Copyright 2. Razor blade O Trademark O Patent O Copyright 3. Harry Potter books O Trademark O Patent O Copyright.arrow_forwardThe meaning of goodwill in accounting is: Multiple Choice The amount by which a company's value exceeds the value of its individual assets and liabilities. Long term assets held as investment. The support of the board of directors for the operating decisions of management. The cost of developing, maintaining, or enhancing the value of a trademark. Rights granted to an entity to deliver a product or service under specified conditions.arrow_forwardWhich of the following research and development and software development costs should be expensed? A) Costs incurred to modify or improve an existing profitable product. B) Software costs before technological feasibility C) Research and development purchased as part of an acquisition. D) Salary costs related to discovering a new product. E) Software development costs incurred after the software works and there is a viable market Which of the following may indicate impairment may have occurred? A) Cash discounts are offered on the products the company sells. B) The business environment is stable. C) A high gross profit percentage on products sold. D) A significant decrease in the useful life of the asset.arrow_forward
- 5. What must happen for goodwill to be recorded as an asset on an accounting balance sheet? Group of answer choices A company has a good reputation A company buys another company for more than the value of the individual assets and liabilities A company has good brands A company does good deedarrow_forwardYou are conducting an accounting research project for your manager. Your manager has asked you to determine the appropriate U.S. GAAP that specifies how your company should recognize and value a newly purchased piece of equipment on the company's balance sheet. Your manager also wants you to determine the GAAP guidance for how the equipment should be depreciated. Your manager has a lot of knowledge and experience in accounting, and has heard about, but has never used. Directions Use the FASB Accounting Standards Codification system to conduct the research your manager has assigned to you. Use the Codification to determine how to recognize, value, and depreciate a piece of equipment. Be prepared to show your manager the specific FASB ASC references that provide the appropriate guidance Also prepare a brief memo explaining to your manager the different levels of the Codification and how to use the Codification system.arrow_forwardThe effect of registration at Companies House is that a company becomes an artificial legal person. Explain and illustrate by reference to relevant cases what this means and outline the main consequences of a company having a legal personality.arrow_forward
- Provide specific examples of these benefits and explain in your own words the financial advantages that owning patent rights may have for certain individuals or groups of people. You should also talk about the ways in which these rights may be protected.arrow_forward“In the accounting literature, there is substantial scepticism towards the adoption of the impairment-only approach to goodwill and other assets with an indefinite useful life (e.g. Li & Sloan, 2017; Ramanna & Watts, 2012; Watts, 2003; Zhang & Zhang, 2017). The main argument for such scepticism is that managers will let their professional judgments at the acquisition date be affected by personal motives; and as a consequence, they may compromise future economic impairments.” Peter Frii & Mattias Hamberg (2021) What motives shape the initial accounting for goodwill under IFRS 3 in a setting dominated by controlling owners?, Accounting in Europe, 18:2, 218-248, DOI: 10.1080/17449480.2021.1912369 Required Critically appraise the treatment of goodwill and impairment within the current IFRS3 Business Combinations and conclude how issues with this standard have led to poor quality accounting information as a consequence of the Covid-19 pandemic.arrow_forwardWhich of the following situation/s do you think are considered to be part of property, plant and equipment as per IAS 16? I. An entity owns a motor vehicle for the exclusive business and private use of its chief accounts officer II. An entity acquired a license to import a specific chemical into the country. III. The entity owns a Pickup truck and trailer used to transport feed to the animals in a cattle farm. IV. An entity owns a fleet of motor vehicles. The vehicles are used by the sales staff in the performance of their duties. a- V only b- I and IV only c- I, III and IV only d- I, II, III and IV onlyarrow_forward
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