In: Accounting
Presented below is selected information for Oriole
Company.
Answer the questions asked about each of the factual situations.
(Do not leave any answer field blank. Enter 0 for
amounts.)
1. Oriole purchased a patent from Vania Co. for
$1,140,000 on January 1, 2018. The patent is being amortized over
its remaining legal life of 10 years, expiring on January 1, 2028.
During 2020, Oriole determined that the economic benefits of the
patent would not last longer than 6 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,
2020?
The amount to be reported |
$enter the dollar amount to be reported |
2. Oriole bought a franchise from Alexander Co. on
January 1, 2019, for $320,000. The carrying amount of the franchise
on Alexander’s books on January 1, 2019, was $320,000. The
franchise agreement had an estimated useful life of 30 years.
Because Oriole must enter a competitive bidding at the end of 2021,
it is unlikely that the franchise will be retained beyond 2028.
What amount should be amortized for the year ended December 31,
2020?
The amount to be amortized |
$enter the dollar amount to be amortized |
3. On January 1, 2020, Oriole incurred
organization costs of $260,000. What amount of organization expense
should be reported in 2020?
The amount to be reported |
$enter the dollar amount to be reported |
4. Oriole purchased the license for distribution
of a popular consumer product on January 1, 2020, for $144,000. It
is expected that this product will generate cash flows for an
indefinite period of time. The license has an initial term of 5
years but by paying a nominal fee, Oriole can renew the license
indefinitely for successive 5-year terms. What amount should be
amortized for the year ended December 31, 2020?
The amount to be amortized |
$enter the dollar amount to be amortized |