Question

Question 16

Day Company purchased a patent on January 1, 2012 for $600,000. The patent had a remaining useful life of 10 years at that date. In January of 2013, Day successfully defends the patent at a cost of $270,000, extending the patent's life to 12/31/24. What amount of amortization expense would Kerr record in 2013?

Question 16 options:

A.	$60,000
B.	$67,500
C.	$72,500
D.	$90,000

Question 17

Riley Co. incurred the following costs during 2013:

Significant modification to the formulation of a chemical product	$160,000
Trouble-shooting in connection with breakdowns during commercial production	$150,000
Cost of exploration of new formulas	$200,000
Seasonal or other periodic design changes to existing products	$185,000
Laboratory research aimed at discovery of new technology	$275,000

In its income statement for the year ended December 31, 2013, Riley should report research and development expense of ____________.

Question 17 options:

A.	$635,000
B.	$785,000
C.	$820,000
D.	$970,000

Question 18

Tripiani Inc. incurred $800,000 of capitalizable costs to develop computer software during 2012. The software will earn total revenues over its 5-year life as follows: 2012 - $500,000; 2013 - $600,000; 2014 - $600,000; 2015 - $200,000; and 2016 - $100,000. What amount of the computer software costs should be expensed in 2012?

Question 18 options:

A.	$200,000
B.	$160,000
C.	$180,000
D.	$266,667

Question 19

Tripiani Inc. incurred $900,000 of capitalizable costs to develop computer software during 2012. The software will be used internally over its 5-year life. What amount of the computer software costs should be expensed in 2012?

Question 19 options:

A.	$900,000
B.	$180,000
C.	$202,500
D.	$300,000

Question 20

In January, 2008, Findley Corporation purchased a patent for a new consumer product for $960,000. At the time of purchase, the patent was valid for fifteen years. Due to the competitive nature of the product, however, the patent was estimated to have a useful life of only ten years. During 2013 the product was permanently removed from the market under governmental order because of a potential health hazard present in the product. What amount should Findley charge to expense during 2013, assuming amortization is recorded at the end of each year?

Question 20 options:

A.	$640,000
B.	$480,000
C.	$96,000
	$64,000

Answer 1

Question 16

Answer -Cost on 1 January 2013=$540000($600000-60000 amortizatise in first year)

+ additinional cost in january 2013=$270000

useful life=12 Years(Extend upto 12/31/24

Amortaziation Expenses=Total cost/useful life

=($540000+$270000)/12

=$67500

So option B is correct.

Question 18

Ans=A)$200000

Capitalization cost=$800000

Total revenue in 5 years=$2000000

Revenuein 1St year=$500000

So computerSoftware costs to be exposed in 2012=(500000/2000000)*8000000

=$200000

Question 19

Answer-B)$180000

Total Capitalization cost=$900000

Useful Life =5 year

Cost should be exposed in1styear(2012)=$900000/5

=$180000

Question 20

Answe-B)480000

Patent was puchased in 2008 for $960000.Due to nature of competituve useful life is 10 years.Cost of the patent after 5 year=($960000/10)*5

=$480000.

Due to goverment order potentialhealth hazard in this product.Total value of the product (i.e$480000) Shoud be amortizise at the end of the year 2013.