On July 1, 2021, ABC Co. purchased a franchise for $78,000. The franchise has a remaining legal and useful life of 15 years. (a). Record the entry to purchase the franchise. (b). Record the amortization expense for 2021.
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- At the beginning of Year 1, Cactus Company has three employees: A, B, and C. Employee A has 3 expected years of future service. Employee B has 4 expected years of future service, and Employee C has 5 expected years of future service. Using the year-of-future-service method, compute the amortization fraction for Years 1 through 5 that Cactus would use to amortize its prior service cost.Information concerning Blue Corporation’s intangible assets is as follows. 1. On January 1, 2020, Blue signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $57,500. Of this amount, $11,500 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $11,500 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 $36,450. 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 2020 was $840,000. 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.)…Yellow Company acquired a trademark for P10,000,000 from Orange Company on January 5, 2021. The trademark is carried in the accounting records of Orange at an amortized cost of P7.6 million. Yellow Company's consultant has estimated that the useful life of the trademark to be indefinite. What amount should Yellow report as accumulated amortization at Dec. 31, 2021?
- On January 1, 2018, Joel Company purchased a patent for P7,140,000. The patent is being amortized over its remaining legal life of 15 years. During 2021, Joel determined that the economic benefits of the patent would not last longer than 10 years from the date of acquisition. What should be reported in the statement of financial position as carrying amount of patent on December 31, 2021?On January 1, 2019, West company acquired a tract of land for P1,000 000. West company paid P100,000 down and singed a two - year promissory note for the balance plus 10% interest compounded annually. The note matures on January 1, 2021. Required: Prepared journal entries to record: 1. Purposed of land on January 1, 2019 2. Accrued interest on December 31, 2019 3. Accrued interest on December 31, 2020 4. Full payments on the note on January 1, 2021Red Company sold to another entity a tract of land costing P5,000,000 for P7,000,000 on January 1, 2021. The buyer paid P1,000,000 down and signed a two-year promissory note for the remainder of the purchase price plus 12% interest compounded annually. The note matures on January 1, 2023. Requirement: Prepare journal entries for 2021, 2022, and 2023.
- 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, 2020Information concerning Adnan Corporation’s intangible assets is as follows. (a) On January 1, 2019, Adnan signed an agreement to operate as a franchisee of Hamed Copy Service, Inc. for an initial franchise fee of R$95,000. Of this amount, R$19,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of R$19,000 each, beginning January 1, 2020. 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, 2019, of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is R$55,350. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Adnan estimates the useful life of the franchise to be 10 years. (b) Adnan incurred R$85,000 of experimental and development costs in its laboratory to develop a patent that was granted on January 2, 2019. Legal fees and other costs associated with…Xavier Corporation begins business on March 1, 2021. The corporation incurs start-up expenditures of $38,000. Round your final answers to the nearest dollar. a. If Xavier elects amortization under § 195, the total start-up expenditures that Xavier may deduct in 2021 is b. Assume the same facts except the start-up costs totaled $52,000.The total start-up expenditures that Xavier may deduct in 2021 is
- On January 1, 2019, Jericho Company purchased a patent for P7,140,000. The patent is being amortized over the remaining legal life of 15 years expiring on January 1, 2034. During 2022, the entity 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 for the patent, net of accumulated amortization, on December 31, 2022? A. 4,282,000 B. 4,896,000 C. 5,050,000 D. 5,236,000On December 31, 2019, Ames Company leased equipment for 10 years. The entity contracted to pay P400, 000 annual rent on December 31, 2019, and on December 31 of each of the next years. The leased liability was recorded at P2, 700,000 on December 31,2019, before the first payment. The equipment’s useful life is 12 years, and the interest rate implicit in the lease in 10%. The entity used the straight line method to depreciate all equipment. 1. In recording the December 31, 2020 payment, by what amount should the lease liability be reduced?a. 270,000b. 230,000c. 225,000d. 170,000 2. What amount should be reported as interest expense for 2020?a. 270,000b. 230,000c. 200,000d. 0 3. What is the lease liability on December 31, 2021?a. 2,700,000b. 2,300,000c. 2,130,000d. 1,900,000On July 1, 2020, Manuel Corporation purchased machinery worth P 8,000,000. Terms: P 500,000 down payment, the balance on three equal annual payments every July 1 of each year. The cash price of the machinery is P 6,000,000. A promissory note is issued for the installment balance. Required: 1. What would be the journal entry to record the acquisition of machinery? 2. What would be the journal entries to record the amortization at December 31, 2020? 3. What is the carrying amount of machinery at December 31, 2020?