In the current year, Company A made the following cash purchases: 1. The exclusive right to manufacture and sell equipment from Company B for $210,000. Company B created the unique design for the equipment. Company A also paid an additional $15,000 in legal and filing fees to attorneys to complete the transaction. 2. An initial fee of $295,000 for a three-year agreement with Company C to use its name for a new facility in the local area. Company C has locations throughout the country. Company A is required to pay an additional fee of $6,000 for each month it operates under the Company C name, with payments beginning in March of the current year. Company A also purchased $410,000 of equipment to be placed in the new facility. 3. The exclusive right to sell a book, for $29,000. Required: Prepare a summary journal entry to record expenditures related to initial acquisitions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Help Save & Exi

In the current year, Company A made the following cash purchases: 1. The exclusive right to manufacture and sell equipment from Company B for $210,000. Company B created the unique design for the equipment. Company A also paid an additional $15,000 in legal and filing fees to attorneys to complete the transaction. 2. An initial fee of $295,000 for a three-year agreement with Company C to use its name for a new facility in the local area. Company C has locations throughout the country. Company A is required to pay an additional fee of $6,000 for each month it operates under the Company C name, with payments beginning in March of the current year. Company A also purchased $410,000 of equipment to be placed in the new facility. 3. The exclusive right to sell a book, for $29,000. Required: Prepare a summary journal entry to record expenditures related to initial acquisitions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Help Save & Exi

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 11EB: The following intangible assets were purchased by Hanna Unlimited: A. A patent with a remaining...

See similar textbooks

Similar questions

The following intangible assets were purchased by Hanna Unlimited: A. A patent with a remaining legal life of twelve years is bought, and Hanna expects to be able to use it for six years. It is purchased at a cost of $48,000. B. A copyright with a remaining life of thirty years is purchased, and Hanna expects to be able to use it for ten years. It is purchased for $70,000. Determine the annual amortization amount for each intangible asset.
Information concerning Blue Corporation's intangible assets is as follows. On January 1, 2025, Blue signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $100,000. Of this amount, $20,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $20,000 each, beginning January 1, 2026. The agreement provides that the down payment is not refundable and no future services are required f the franchisor. The present value at January 1, 2025, of the 4 annual payments discounted at 15% (the implicit rate for a loan of this type) is $57,100. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Blue's revenue from the franchise for 2025 was $870,000. Blue estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.) Blue incurred…
In the current year, Company A made the following cash purchases: 1. The exclusive right to manufacture and sell equipment from Company B for $203,000. Company B created the unique design for the equipment. Company A also paid an additional $11,500 in legal and filing fees to attorneys to complete the transaction. 2. An initial fee of $260,000 for a three-year agreement with Company C to use its name for a new facility in the local area. Company C has locations throughout the country. Company A is required to pay an additional fee of $5,300 for each month it operates under the Company C name, with payments beginning in March of the current year. Company A also purchased $403,000 of equipment to be placed in the new facility. 3. The exclusive right to sell a book, for $22,000. Required: Prepare a summary journal entry to record expenditures related to initial acquisitions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account…
In 2018, Bratten Fitness Company made the following cash purchases:1. The exclusive right to manufacture and sell the X-Core workout machine from Symmetry Corporation for$200,000. Symmetry created the unique design for the machine. Bratten also paid an additional $10,000 inlegal and filing fees to attorneys to complete the transaction.2. An initial fee of $300,000 for a three-year agreement with Silver’s Gym to use its name for a new facility inthe local area. Silver’s Gym has locations throughout the country. Bratten is required to pay an additional feeof $5,000 for each month it operates under the Silver’s Gym name, with payments beginning in March 2018.Bratten also purchased $400,000 of exercise equipment to be placed in the new facility.3. The exclusive right to sell Healthy Choice, a book authored by Kent Patterson, for $25,000. The bookincludes healthy recipes, recommendations for dietary supplements, and natural remedies. Bratten plans todisplay the book at the check-in counter…
4. On January 2, 2022, Lauren Corporation purchased factory equipment for $850,000. In addition, it paid $82,000 in sales tax and $7,000 in installation charges. Shipping costs to ship the equipment to the factory were $2,500 and were paid by Lauren. Lauren paid $300,000 in cash and signed a two-year note for the balance. Required: a. Prepare the journal entry to record the acquisition of this equipment. b. Assuming straight-line depreciation, an estimated residual value of $75,000 and an estimated life of 10 years, prepare the journal entry for the depreciation expense for 2021.
anson company had the folowing machinery aquisitions during the year 1. acquired the machine with an invoice price of 3,000,000 subjectnto a cash discount of 10% which was taken . the entity incured cost of 50,000 in removing the old machine prior to the installation of the new one .Machine supplies were acquired at a cost of the 150,000 . 2. During the early part of current year the entity purchase the machine for 500,000 down on four monthly installment 1,250,000 .the cash price of the machine was 4700,000 . 3. at the beginning of the current year, the entity purchased a machine for 2,000,000 in exchange for a noninterest bearing ntes requiring four payments of 500,000 . the first payment was made at the end of current year . the implicit rate of interest for this note at date of issuance was 10% . The present value of an ordinary annuity of 1 at 10% is 3.17 for four periods. the present value of annuity of 1 in advance at 10% is 3.49 for four periods. 4. at the beginning of…
French Vanilla Company commenced operations in the current year. A number of expenditures were made during the current year that were debited to one account Intangible asset. Incorporation fees and legal costs related to organizing the incorporation for P150,000 Fire Insurance premium for three-year period for 60,000 Legal fees for filing a patent on a new product resulting from an A&B project for 50,000 Purchase of copyright for 300,000 Legal fees for successful defense of the patent developed from the project for 50,000 Entered into a 10-year franchise agreement with a franchisor for 600,000 Advertising cost for 50,000 Purchase of all the outstanding ordinary shares of an acquire. On the date of purchase, the acquire had fair value of total assets, P6,000,000 and total liabilities of P2,200,000. for 5,000,00 What amount should be reported as intangible asset?
Bluestone Company had three intangible assets at the end of the current year: a. A patent purchased this year from Miller Company on January 1 for a cash cost of $4,000. When purchased, the patent had an estimated life of 10 years. b. A trademark was registered with the federal government for $11,000. Management estimated that the trademark could be worth as much as $260,000 because it has an indefinite life. c. Computer licensing rights were purchased this year on January 1 for $36,000. The rights are expected to have a four-year useful life to the company. Required: 1. Compute the acquisition cost of each intangible asset. 2. Compute the amortization of each intangible for the current year ended December 31. 3. Show how these assets and any related expenses should be reported on the balance sheet and income statement for the current year.
Prepare a schedule showing all expenses resulting from the transactions that would appear on Concord's income statement for the year ended December 31, 2025. CONCORD CORPORATION Expenses Resulting from Selected Intangible Assets Transactions $
Information concerning Cheyenne Corporation’s intangible assets is as follows. 1. On January 1, 2020, Cheyenne signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $50,000. Of this amount, $10,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $10,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020, of the 4 annual payments discounted at 10% (the implicit rate for a loan of this type) is $31,700. The agreement also provides that 4% of the revenue from the franchise must be paid to the franchisor annually. Cheyenne’s revenue from the franchise for 2020 was $900,000. Cheyenne estimates the useful life of the franchise to be 10 years. (Hint:You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and…
. Sunny Inc. had the following transactions related to intangibles during the year: • On January 1, 2022, Sunny signed an agreement to operate as a franchisee of Dairy King, Inc. for an initial franchise fee of $150,000. The agreement provides that the fee is not refundable. Sunny estimates the useful life of the franchise to be 15 years. • A trade name was purchased from Cloudy Company for $90,000 on January 1, 2020. Expenditures for successful litigation in defense of the trade name totaling $18,000 were paid on January 1, 2022. Sunny estimates that the trade name will have an indefinite life. After all necessary adjusting entries have been made, what is the total book value of the intangible assets on the December 31, 2022, balance sheet? A) $108,000 B) $140,000 C) $248,000 D) $258,000 E) None of the above
Information concerning Sandro Corporation's intangible assets is as follows. 1. On January 1, 2020, Sandro signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $75,000. Of this amount, $15,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $15,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020, of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is $43,700. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Sandro's revenue from the franchise for 2020 was $900,000. Sandro estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.) 2.…