Question

In: Accounting

At the start of the current year, a company paid for the following in cash: ...

At the start of the current year, a company paid for the following in cash:

Copyrights, $2,000,000

Equipment, $25,000,000

Goodwill, $4,500,000

Inventory, $1,500,000

Land, $15,000,000

Patents, $1,500,000

Prepaid rent, $500,000

Research and development, $500,000

Supplies, $4,000,000

Trademarks, $1,000,000

It amortizes its intangibles over 10 years. Determine its current year amortization expense.

Group of answer choices

a. $950,000

b. $400,000

c. $500,000

d. $150,000

e. $350,000

2.

Based on the following year-end account balances, what amount would the company report on its balance sheet as intangible assets?

Buildings and Equipment	$35,000,000
Accumulated depreciation	5,000,000
Copyrights	2,400,000
Patents	10,000,000
Research and development	12,000,000

Group of answer choices

a. $12,400,000.

b. $5,000,000.

c. $10,000,000

d. $17,400,000.

e. $24,400,000.

Expert Solution

An intangible asset is an asset that does not have any physical existence. Like tangible assets, you cannot touch or feel them but they have a current and future value. A business can either develop these assets internally or can acquire them in a business combination.Intangible assets are amortized into an expense account.

Types of Intangible Assets :

1 Goodwill

2 Franchise Agreements

3 Patents

4 Copyrights

5 Trademarks

6 Licenses

7 Broadcast Rights

8 Government Grants

9 Non-competition Agreement

10 Internet Domain Names

11 Customer Lists and Relationships

12 Backlog of Orders

13 Works of Artistic Importance

14 Service Contracts and Lease Agreements

15 Trade Secrets and Know-how

16 Research and Development

Determining current year amortization expense :

Copyright	$2,000,000
Goodwill	$4,500,000
Patents	$1,500,000
Research & Development	$500,000
Trademarks	$1,000,000
Total Intangible Assets	$9,500,000

Amortization = Total Intangible Assets/Economic life = $9500000/10years = $950000

So option a. is correct answer.

Computation of amount companywould report on its balance sheet as intangible assets :

Copyrights	$2,400,000
Patents	$10,000,000
Research & Development	$12,000,000
Total Intangible Assets	$24,400,000

So option d. is correct answer.

ekkarill92 answered 1 year ago

Pinnacle Plus declared and paid a cash dividend of $6,600 in the current year. Its comparative...

Pinnacle Plus declared and paid a cash dividend of $6,600 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: Current Year Previous Year Income Statement Sales Revenue $ 110,000 $ 99,000 Cost of Goods Sold 52,000 48,000 Gross Profit 58,000 51,000 Operating Expenses 36,000 33,000 Interest Expense 4,000 4,000 Income before Income Tax Expense 18,000 14,000 Income Tax Expense (30%) 5,400 4,200 Net Income $ 12,600 $ 9,800 Balance Sheet Cash $...

Pinnacle Plus declared and paid a cash dividend of $7,600 in the current year. Its comparative...

Pinnacle Plus declared and paid a cash dividend of $7,600 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: Current Year Previous Year Income Statement Sales Revenue $ 160,000 $ 139,000 Cost of Goods Sold 72,000 68,000 Gross Profit 88,000 71,000 Operating Expenses 46,000 41,000 Interest Expense 5,000 5,000 Income before Income Tax Expense 37,000 25,000 Income Tax Expense (30%) 11,100 7,500 Net Income $ 25,900 $ 17,500 Balance Sheet Cash $...

Pinnacle Plus declared and paid a cash dividend of $7,700 in the current year. Its comparative...

Pinnacle Plus declared and paid a cash dividend of $7,700 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: Current Year Previous Year Income Statement Sales Revenue $ 165,000 $ 143,000 Cost of Goods Sold 74,000 70,000 Gross Profit 91,000 73,000 Operating Expenses 47,000 41,800 Interest Expense 5,100 5,100 Income before Income Tax Expense 38,900 26,100 Income Tax Expense (30%) 11,670 7,830 Net Income $ 27,230 $ 18,270 Balance Sheet Cash $...

Pinnacle Plus declared and paid a cash dividend of $8,400 in the current year. Its comparative...

Pinnacle Plus declared and paid a cash dividend of $8,400 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: Current Year Previous Year Income Statement Sales Revenue $ 200,000 $ 171,000 Cost of Goods Sold 88,000 84,000 Gross Profit 112,000 87,000 Operating Expenses 54,000 47,400 Interest Expense 5,800 5,800 Income before Income Tax Expense 52,200 33,800 Income Tax Expense (30%) 15,660 10,140 Net Income $ 36,540 $ 23,660 Balance Sheet Cash $...

Prepare the cash flow statement for the company for the year 2018 (start with NPAT) and...

Prepare the cash flow statement for the company for the year 2018 (start with NPAT) and write down your answer for each section. (Do not show the full format, just write down the balance for each section.) (Depreciation Expense for the year 2018 is 500,000 USD) Cash flow from operations: ? Cash flow from investments:? Cash flow from financing:? Cash Surplus (Deficit) :? Z&B Company Balance Sheets (USD) Z&B Company Income Statement for the Year 2018 (USD) ASSETS 31.12.2017 31.12.2018...

Springstein began business at the start of the current year. The company planned to produce 40,000...

Springstein began business at the start of the current year. The company planned to produce 40,000 units, and actual production conformed to expectations. Sales totaled 34,000 units at $39 each. Costs incurred were: Fixed manufacturing overhead $255,000 Fixed selling and administrative cost 203,000 Variable manufacturing cost per unit 18 Variable selling and administrative cost per unit 5 If there were no variances, the company's variable-costing income would be: $114,500. $544,000. $29,000. None of these. $86,000 Springer...

On July 1 of the current calendar year, Plum Co. paid $7,600 cash for management services...

On July 1 of the current calendar year, Plum Co. paid $7,600 cash for management services to be performed over a two-year period beginning July 1. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry on December 31 of the current year for Plum would include: Multiple Choice A debit to an expense and a credit to a prepaid expense for $5,700. A debit to a prepaid expense...

Mary’s AGI for the year is $30,000. She paid the following amounts during the current year:...

Mary’s AGI for the year is $30,000. She paid the following amounts during the current year: Amount Purpose $2,500 Interest on $100,000 mortgage to acquire personal residence 550 Points paid to obtain the mortgage 850 Interest on auto loan (auto is used 100% for personal purposes) Mary’s current year interest itemized deduction after any applicable floor is: a. $3,900. b. $3,350. c. $3,050. d. $2,500. e. none of the above. 2. Jon’s AGI for the year is $40,000....

A company began operations at the start of 2015. During the year, it made cash sales...

A company began operations at the start of 2015. During the year, it made cash sales of $150,000 and credit sales totaling $500,000. $420,000 in cash from these credit sales was collected during the year. The company purchased land for $60,000 for a new location. Expenses totaled $339,000, of which $300,000 was paid in cash. Dividends of $10,000 were paid to stockholders. What was net income for 2015? A. $311,000 B. $270,000 C. $301,000 D. $350,000 E. None of the...

On May 1 of the current year a company paid $200,000 to purchase 7%, 10-year bonds...

On May 1 of the current year a company paid $200,000 to purchase 7%, 10-year bonds with a par value of $200,000; interest is paid semiannually on May 1 and November 1. The company intends to hold the bonds until they mature. a. Prepare the journal entries to record the bond purchase. b. The receipt of the first semiannual interest payment on September 1 of the current year c. The accrual of interest for year-end December 31 d. The receipt...