corporation purchased a patent for 6,600 4,500
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- Amortization Entries Kleen Company acquired patent rights on January 10 of Year 1 for $2,800,000. The patent has a useful life equal to its legal life of eight years. On January 7 of Year 4, Kleen successfully defended the patent in a lawsuit at a cost of $38,000. a. Determine the patent amortization expense for Year 4 ended December 31. 134,000 x Feedback V Check My Work For intangible assets with finite lives, a company uses the straight-line method to calculate amortization. If a company successfully defends a patent it becomes part of the cost of the patent. If the company loses a lawsuit regarding a patent infringement, then the patent is written off. b. Journalize the adjusting entry on December 31 of Year 4 to recognize the amortization. If an amount box does not require an entry, leave it blank. Amortization Expense-Patents 2,125 X Patents 2,125 XQ17 An entity acquired an operating license from the local council to operate a night club for ten years in the area. The council charges R150 000 for the license to operating in such an affluent area. The entity decided to use the straight line method of amortization for all its licenses. What is the carrying amount of the license after four years? Select one: a. R150 000 b. R60 000 c. R15 000 d. R90 000Problem 6. Sales and Leaseback On Januar y 1 20х1, Entity sold building to Entity and a simultaneously leased it back. Additional information follows : Fair value of building 1,000,000 Carrying amount of building 800,000 Remaining useful life of building 10 years Lease Term 5 years Annual rent payable at the end of each year 100,000 Implicit interest rate equal to market rate 12% The transfer qualifies as a sale. Requirements (Independent cases) : а. If the sales price is P1,000,000 which is equal to fair value compute t he following under the seller-lessee accounting i. Lease liability ii. Right of use Asset iii. Gain or Loss iv. Journal entries on January 1, 20x1 b. If the sales price is P1,000,000 which is equal to fair value compute the following under the buyer-lessor acco unting i. Gross Investment ii. Net Investment iii. Unearned Interest Income iv. Journal entries on January 1, 20x1 c. Same requirements in a and b but the sales price is P1,100,000 which is above the fair value…
- QUESTION 9 A company buys a patent for $100,000 on 31 December 20X1. It expects to use the patent for the next 10 years, after which it will be valueless. According to IAS 38 Intangible assets, compute the annual amortisation charge. What is the journal entry required to record the amortisation in the accounts for the year ended 31 December 20X2Recording Amortization Dovetail Technologies Company acquired patent rights on January 6, 20Y5, for $2,265,000. The patent has a useful life of 14 years. On January 7, 20Y6, Dovetail Technologies successfully defended the patent in a lawsuit at a cost of $283,125. a. Determine the patent amortization expense for the current year ended December 31, 20Y6, If required, round your answer to nearest whole value. b. Illustrate the effects on the accounts and financial statements to recognize the amortization. For decreases in accounts or outflows of cash, enter your answers as negative numbers. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Round your final answer to the nearest whole dollar. Financial Statement Effects. Dec. 31. Assets) Statement of Cash Flows Balance Sheet " Liabilities + Stockholders' Equity Income StatementEx 10: Section 4.3.1. Cost model & revaluation model- skill: basic •Active Asset Inc. owns a freely transferable taxi operator's license, which it acquired on January 1, 20X1, at an initial cost of $10,000. The useful life of the license is five years (based on the date it is valid for). The entity uses the straight-line method to amortize the intangible. Such licenses are frequently traded either between existing operators or with aspiring operators. At the balance sheet date, on December 31, 20X2, due to a government-permitted increase in fixed taxi fares, the traded values of such a license was $12,000. The accumulated amortization on December 31, 20X2, amounted to $4,000. •Required Pass Journals
- Q2 An entity acquired an operating license from the local council to operate a night club for ten years in the area. The council charges R150 000 for the license to operating in such an affluent area. The entity decided to use the straight line method of amortization for all its licenses. What is the amount of amortization to be charged against the profits in the third year? Select one: a. R105 000 b. R45 000 c. R0 d. R15 000RMSUM BARS Quèstion 5 A. Manam Co. purchased a Trademark for $ 160,000 on October 1, 2020. The Trademark is legally used for 10-year period. Required: Prepare the journal entry to record the amortization expense on Dec. 31, 2020 B. On January 1, 2018, Zallaq Trading Co. acquired a truck costing $850,000. Zallaq uses the straight-line method to depreciate the truck with an estimated salvage value of $50,000 and an estimated useful life of 20 years. On July 1, 2020, Zallaq sold the truck for $ 720,000 cash. Required: Prepare journal entries to record: 1. The partial year's depreciation (the update) on July 1, 2020. 2. The sale of the truck on July 1, 2020. YOUR ANSWER SHOULD BE IN THE FOLLOWING FORM; DO NOT USE "," BETWEEN NUMBERS: Dr. Cash 10000 Cr. Land 10000 For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). In *ロ白 Q ... BIU Paragraph Arial 10pt !!Question 47 On January 1, 2019, Hess Co. purchased a patent for $1,904,000. The patent is being amortized over its remaining legal life of 15 years expiring on January 1, 2034. During 2022, Hess determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2022? $1,344,000 $1,396,400 $1,305,600 $1,142,400
- QUESTION 9 On July 1, 2015, ABC Corporation purchased a patent asset for $21,600 and a trademark asset for $12,400. The patent's economic useful life is 16 years from the purchase date. The trademark has an indefinite life. How much amortization expense should ABC recognize for these intangible asseis in calendar year 2015? O a. $1,350 O b.$1,062.50 O c. $2,125 O d. $675Question 4 In early January 2023, Roger Corporation applied for a patent, incurring legal costs of $30,000. In January 2024, Roger incurred $9,000 of legal fees in a successful defense of its patent. Instructions a. Compute 2023 amortization, 12/31/23 carrying value, 2024 amortization, and 12/31/24 carrying value if the company amortizes the patent over 10 years. b. At the beginning of 2025, based on new market research, Roger determines that the fair value of the patent is $27,500. Estimated future cash flows from the patent are $30,000 on January 3, 2025. Prepare the journal entry, if any, to record the impairment loss. c. Compute the 2025 amortization and the 12/31/25 carrying value.Problem 1: Intangible Example 1 Patent Pizza the Action purchases a patent from On a Roll on January 1, 2018 for $64,000. The patent has a remaining legal life of 16 years. Pizza the Action feels the patent will be useful until the end of 2027. Prepare Pizza the Action's journal entries to record the purchase and 2018 amortization. I In January 2020, Pizza the Action spends $26,000 successfully defending a patent suit. Pizza the Action still feels the patent will be useful until the end of 2027. Prepare the entries to record the $26,000 expenditure and the 2020 amortization. Assume instead that in January 2020, Pizza the Action spends $26,000 to defend its patent but they are UNSUCCESSFUL and the patent is deemed useless. Prepare the necessary entries. Be sure to include the dates these entries will be written.
