FIN. ACCT.-TOOLS FOR BUS.DEC.MAKING-CODE
9th Edition
ISBN: 9781119595724
Author: Kimmel
Publisher: WILEY C
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 9, Problem 9.16E
To determine
Amortization Expenses: It refers to non-cash expenses incurred during a financial year. It is charged on an appropriate basis over a certain period of time, during which the benefits of such expenses are received by the company.
To write: A short memo to client that explains the implications.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Dodd Corp. is preparing its December 31 financial statements and must determine the proper accounting treatment for the
following situations
• For the year ended December 31, Dodd has a loss carry forward of $180,000 available to offset future taxable income,
However, there are no temporary differences.
On December 30, Dodd received a $200,000 offer for its patent Dodd's management is considering whether to sell the
patent. The offer expires on February 28 of the next year. The patent has a carrying amount of $100,000 at December
31
Assume a current and future income tax rate of 21 percent. In its income statement, Dodd should recognize an increase in net
income of
O $0
O $37,800
$79,000
The Laura Company has the following errors on its books as of December 31, 2020. The books for 2020 have not yet been closed.
a.
In 2020, fully depreciated equipment (with no residual value) that originally cost $8,000 was sold for $700 as scrap. The company credited the $700 proceeds to Equipment.
b.
On January 1, 2019, the company recorded the purchase of equipment in exchange for a three-year, noninterest-bearing note payable in the amount of $10,000. Interest rates were then 8%, but no recognition was made of this fact. The present value of $1 at 8% for three periods is 0.7938. (Ignore depreciation.)
Required:
Prepare journal entries to correct these errors at December 31, 2020. Ignore income taxes.
Wilson Corporation is performing the test of impairment of its Technology reporting unit at the end of the year. Wilson has determined the fair value of the unit using a multiple of earnings approach at $2,000,000. The carrying value of the net assets of the Technology unit is $2,100,000. What should Wilson do with this information?
a) Record an impairment loss of $100,000.
b) Record no impairment loss.
c) Perform step 2 of the test of impairment.
d) Value goodwill individually.
Chapter 9 Solutions
FIN. ACCT.-TOOLS FOR BUS.DEC.MAKING-CODE
Ch. 9 - Prob. 1QCh. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - Prob. 4QCh. 9 - Prob. 5QCh. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Prob. 8QCh. 9 - Prob. 9QCh. 9 - In the fourth year of an assets 5-year useful...
Ch. 9 - Prob. 11QCh. 9 - Prob. 12QCh. 9 - Prob. 13QCh. 9 - Prob. 14QCh. 9 - Prob. 15QCh. 9 - Prob. 16QCh. 9 - Prob. 17QCh. 9 - Prob. 18QCh. 9 - Prob. 19QCh. 9 - Prob. 20QCh. 9 - Prob. 22QCh. 9 - Give an example of an industry that would be...Ch. 9 - Prob. 24QCh. 9 - Prob. 25QCh. 9 - Prob. 26QCh. 9 - Prob. 27QCh. 9 - Prob. 9.1BECh. 9 - Prob. 9.2BECh. 9 - Prob. 9.3BECh. 9 - Prob. 9.4BECh. 9 - Prob. 9.5BECh. 9 - Prob. 9.7BECh. 9 - Prob. 9.13BECh. 9 - Prob. 9.14BECh. 9 - Prob. 9.1DIECh. 9 - Prob. 9.2bDIECh. 9 - Prob. 9.3DIECh. 9 - Match the statement with the term most directly...Ch. 9 - Prob. 9.2ECh. 9 - Prob. 9.4ECh. 9 - Prob. 9.9ECh. 9 - Prob. 9.12ECh. 9 - Prob. 9.13ECh. 9 - Prob. 9.16ECh. 9 - Prob. 9.17ECh. 9 - Prob. 9.19ECh. 9 - Prob. 9.20ECh. 9 - Prob. 9.21ECh. 9 - Prob. 9.23ECh. 9 - Prob. 9.24ECh. 9 - Prob. 9.1APCh. 9 - Prob. 9.7APCh. 9 - Prob. 9.2EYCTCh. 9 - Prob. 9.3EYCTCh. 9 - Prob. 9.6EYCTCh. 9 - Prob. 9.7EYCTCh. 9 - Prob. 9.8EYCTCh. 9 - Prob. 9.10EYCTCh. 9 - CONSIDERING PEOPLE, PLANET, AND PROFIT The March...Ch. 9 - Prob. 9.1IECh. 9 - Prob. 9.2IECh. 9 - Prob. 9.3IECh. 9 - Prob. 9.4IE
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- On August 1, 2014, Lleiram Corporation purchased a new machine on a deferred payment basis. A down payment of P200,000 was made and 4 annual installments of P600,000 each are to be made beginning on September 1, 2014. Terms of the contract are not normal in the industry where the same types of assets are being traded. Due to an employee strike, Flight could not install the machine immediately, thus, incurred P3,000 of storage cost. Cost of installation (excluding the storage cost) amounted to P20,000. The cash price of the machine was P2,300,000. How much should be capitalized as cost of the machine? a. 2,300,000 c. 2,323,000 b. 2,320,000 d. 2,600,000arrow_forwardNovato Inc. went to court this year and successfully defended its patent from infringement by a competitor. The cost of this defense should be charged to a. patents and amortized over the remaining useful life of the patent b. expenses of the period O c. patents and amortized over the legal life of the patent O d. legal fees and amortized over 5 years or lessarrow_forwardSunland Co. bought a patent from Carla Vista Corp. on January 1, 2021, for $918000. An independent consultant retained by Sunlandestimated that the remaining useful life at January 1, 2021 is 15 years. Its unamortized cost on Carla Vista’s accounting records was $459000; the patent had been amortized for 5 years by Carla Vista. How much should be amortized for the year ended December 31, 2021 by Sunland Co.?arrow_forward
- BioDrugs Ltd. purchased a patent for a new drug for $500,000 on January 1, 2020. The patent was valid for 4 years and the firm uses a straight-line amortization method. On December 31, 2020, BioDrugs Ltd. learned that the drug is not as effective as other competitor drugs already on the market, rendering it useless. What should BioDrugs Ltd. do when preparing the fiscal year-end financial statements on December 31, 2020? Discuss the effects (if any) on the income statement (1/S) and the balance sheet (B/S). Be as succinct as possible, one sentence each will do.arrow_forwardLark Corp. appropriately determined that each of its long-term projects represents a single performance obligation that is satisfied over time. At the end of the current year, Lark estimates that its costs to complete a project exceed the contract price, so that an overall loss on the contract is anticipated. Required: What journal entry will Lark record at the end of the current year, given the following information? • Revenue to date is $350,000 ($175,000 of which is to be recognized in the current year). • The expense recognized previously was $100,000. • An overall loss of $30,000 is anticipatedarrow_forwardOn January 1, Year 1, Greg Co. leased an office building to Abby Co. The lease was properly classified by the two companies as an operating lease. The lease term is for 20 years and the estimated remaining useful life of the office building is 50 years. The controller of Greg Co. is not sure whether Greg Co. should test the office building for impairment while it is leased to Abby Co. Which section of the Accounting Standards Codification best helps the controller of Greg Co. determine whether the office building is tested for impairment while it is leased to Abby Co.? Enter your response in the answer fields below. Guidance on correctly structuring your response appears above and below the answer fields. Unless specifically requested, your response should not cite implementation guidance. Type the topic here. Correctly formatted FASB ASC topics are 3 digits. FASB ASC Some examples of correctly formatted FASB ASC responses are 205-10-05-1,323- 740-525-1, 260-10-60-1A, 715-30-35-95,…arrow_forward
- Firoz Corp. obtained a trade name in January 2010, incurring legal costs of SAR15,000. The company amortizes the trade name over 8 years. Firoz, successfully defended its trade name in January 2011, incurring SAR 4,900 in legal fees. At the beginning of 2012, based on new marketing research, Firoz determines that the recoverable amount of the trade name is SAR 12.000. Required: a. Prepare the necessary journal entries on amortization for the years ending December 31, 2010 & 2011.. b. In 2012, will Firoz meet any impairment loss? If yes, prepare journal entry to record the impairment loss and amortization entry on 31st Dec 2012arrow_forwardSupplier Corp. enters into a government contract during the year to provide computer equipment for $3,200,000. The contract consists of a single performance obligation to provide specified equipment in three years. Total costs estimated by Supplier Corp. for the contract are $2,240,000. The equipment is highly specialized and has no alternative uses. As negotiated in the contract, any costs incurred by Supplier Corp. plus a specified profit margin will be paid to Supplier Corp. in the event of a contract cancellation. Actual costs incurred during the first year of the contract were $1,024,000 including unexpected cost overruns of $128,000 due to labor inefficiencies. Assume that at the end of the second year of the contract, the estimate of total costs has increased to $2,400,000 million due to an increase in cost of materials. Actual costs incurred to date are $1,800,000, excluding year one inefficiencies. a. Calculate (1) recognized revenue, (2) the gross profit, and (3) adjusted…arrow_forwardOn January 2, 2018, XYZ acquired copy rights to the original recording of a famous singer named Sarah Lraen. The agreement with the singer allows the company to record and rerecord the songs of the singer for a period of 5 years. During the initial 6 month period of the agreement, the singer was very sick and consequently cannot record. The studio time that was blocked by the company had to be paid even during the period the singer could not sing. The following costs were incurred by the company: -Legal cost of acquiring the copy rights, P15M - Documentation expenses related to the copy acquisition, 1.5M -Operational loss (studio time lost etc.), 3M - Massive advertising campaign to launch the artist, 1.5M a. How much should the copy right be initially recognized? b. What is the carrying value of the copy right as of December 31, 2019?arrow_forward
- On January 1, 2017, Build Company entered into a construction contract with an owner to build an oil refinery. The contract has the following characteristics; the oil refinery is highly customized to the owner’s specifications and changes to these specifications by the owner are expected over the contract term. The oil refinery does not have an alternative use to the contractor. Non-refundable, interim progress payments are required as a mechanism to finance the contract. The owner can cancel the contract at any time (with a termination penalty); any work in process is the property of the owner. As a result, another entity would not need to re-perform the tasks performed to date. Physical possession and title do not pass until completion of the contract. The contractor determines that the contract has a single performance obligation to build the refinery. The majority of evidences suggests that the contractor’s performance creates an assets that the customer controls and control is…arrow_forwardBrave Corporation authorized Heart on January 1, 2010 to operate as a franchisee for an initial franchise fee of P2,500,000. Of this amount, P1,500,000 was received upon signing of the contract and the balance is due in two equal annual payments beginning January 1, 2011. The contract provides that the nonrefundable downpayment represents fair measure of the services already performed, however, substantial performance is still required of Brave. Collectibility of the note is reasonably certain. If the present value of the two annual payments is P895,000, what amount of unearned franchise fees from Heart should Brave report on December 31, 2010?arrow_forwardSupplier Corp, enters into a government contract during the year to provide computer equipment for $2,000,000. The contract consists of a single performance obligation to provide specified equipment in three years. Total costs estimated by Supplier Corp. for the contract are $1,400,000. The equipment is highly specialized and has no alternative uses. As negotiated in the contract, any costs incurred by Supplier Corp. plus a specified profit margin will be paid to Supplier Corp. in the event of a contract cancellation. Actual costs incurred during the first year of the contract were $640,000 including unexpected cost overruns of $80,000 due to labor inefficiencies. Assume that at the end of the second year of the contract, the estimate of total costs has increased to $1,500,000 million due to an increase in cost of materials. Actual costs incurred to date are $1,125,000, excluding year one inefficiencies. a. Calculate (1) recognized revenue, (2) the gross profit, and (3) adjusted…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning