Intangibles: Balance Sheet Presentation and Income Statement Effects Clinton Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,140,000 on January 1, 2018. Clinton estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of $900,000 when Lou sold it to Clinton. During 2019, a franchise was purchased from Rink Company for $460,000. In addition, 6% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $1,700,000. Clinton estimates the useful life of the franchise to be 10 years and takes a full year's amortization in the year of purchase. Clinton incurred R&D costs in 2019 as follows: Materials and equipment $133,000 Personnel 144,000 Indirect costs 53,000 $330,000 Clinton estimates that these costs will be recouped by December 31, 2020. On January 1, 2019, Clinton estimates, based on new events, that the remaining life of the patent purchased on January 1, 2018, is only 10 years from January 1, 2019.
Required: 1. Prepare a schedule showing the intangibles section of Clinton's balance sheet at December 31, 2019.
2. Prepare a schedule showing the income statement effects for the year ended December 31, 2019, as a result of the previously mentioned facts.
In: Accounting
Ryerson’s badminton team has 4 male members and 7 female members;
Ryerson’s tennis team has 4 male members and 3 female members.
These two groups have different members. The university decides to make the two teams have equal
number of members by randomly moving two persons from the badminton group to the tennis group. It then randomly
selects a person from the tennis group. What is the probability to get a female?
In: Statistics and Probability
Ryerson’s badminton team has 4 male members and 7 female
members; Ryerson’s tennis team has 4 male members and
3 female members. These two groups have different members. The
university decides to make the two teams have equal
number of members by randomly moving two persons from the badminton
group to the tennis group. It then randomly
selects a person from the tennis group. What is the probability to
get a female?
In: Statistics and Probability
Private scholarship for tuition $9,600
Loan from financial aid office $7,200
Cash withdrawn from a qualified tuition program to pay tuition $10,500
Cash dividends on qualified investments $185
Cash prize award in contest $1,400
What is Roland’s adjusted gross income?
In: Accounting
Studying how the management of US Steel, a large steel-producing company, decides how many tons of steel to produce and the price to charge for its steel would be considered
a. descriptive economics.
b. empirical economics.
c. microeconomics.
d. macroeconomics
In: Economics
1)The following transactions of M&B Merchandise Company are given:
| January 2, 2019 | Purchased merchandise for TL 23.000 under the condition 10/6; n/30. |
| January 4, 2019 | Returned merchandise worth TL 6.000. |
| January 6, 2019 | Sold merchandise for TL 8.000 under the condition 4/7; n/30. The cost of merchandise sold was TL 5.000. |
What is the value of merchandise after these transactions?
|
17.000 TL |
||
|
15.000 TL |
||
|
11.000 TL |
||
|
12.000 TL |
2)Company Z discovered that some merchandise purchased on account was defective and returned the goods to the supplier. The entry to record this return will reduce Company Z’s:
|
Sales return and the cost of goods sold |
||
|
Inventory and cost of goods sold |
||
|
Inventory and liabilities |
||
|
Sales revenue and liabilities |
3)On January 1, 2016, Shoreham, Inc. acquired an equipment for $45,600. The estimated life of the equipment is 6 years, with an estimated residual value of $2,400. In its financial statements, Shoreham uses straight-line depreciation. The ending balance of accumulated depreciation at December 31, 2017, will be:
|
$7,200 |
||
|
$15,200 |
||
|
$14,400 |
||
|
$7,600 |
4)Machinery acquired new on January 1 at a cost of $80,000 was estimated to have a useful life of 10 years and a residual salvage value of $20,000. Straight-line depreciation was used. The depreciation expense for the seventh year of use would be in value of:
|
$42,000 |
||
|
$6,000 |
||
|
$8,000 |
||
|
$2,000 |
In: Accounting
Question 3 (Recognition and fair value adjustments of acquired assets & liabilities)
On January1, 2015, Invigilators Enterprises acquired 100 percent of the shares of Lemma Company.
The separate condensed statements of financial position immediately after the acquisition appeared as shown below:
Invigilator enterprises Lemma company
Intangible assets ------------ 2,000
PPE 490,000 80,000
Investment in Lemma 600,000 ------------
Inventories 230,000 360,000
Trades and receivables 400,000 240,000
Total assets 1,720,000 682,000
Share capital 1,000,000 200,000
Retained earnings 140,000 100,000
Provisions 20,000 30,000
Current liabilities 560,000 353,000
total equity and liabilities 1,720,000 682,000
Lemma owns a patent for the production of a new product. Lemma did not recognize the patent in its separate financial statements. The estimated fair value of the patent at acquisition date amounts to $80,000 Additional information (at the acquisition date:
The fair value of Lemma’s main corporate offices is $130,000 (net book value of $50,000)
The fair value of Lemma’s main inventories amounts to $320,000
On January 1, 2015, Invigilator Enterprises still has to pay an invoice ($100,000) for services rendered by Lemma Company in December 2014
Task:
1. Compute the goodwill at the acquisition date
2 Prepare the consolidation adjustments at the acquisition date
3. Prepare the consolidated statement of financial position of the invigilator Group as at January 2015.
In: Accounting
On January 1, 2020, Aumont Company sold 12% bonds having a maturity value of $500,000 for $537,907, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature January 1, 2025, with interest payable December 31 of each year. Aumont Company allocates interest and unamortized discount or premium on the effective-interest basis. Prepare the journal entry at the date of the bond issuance. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
a.Prepare the journal entry at the date of the bond issuance
b.Prepare a schedule of interest expense and bond amortization for 2020–2022.
c.Prepare the journal entry to record the interest payment and the amortization for 2020.
d.Prepare the journal entry to record the interest payment and the amortization for 2022.
Prepare the journal entry at the date of the bond issuance.
(Round answer to 0 decimal places, e.g. 38,548. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts. Credit account titles are automatically
indented when amount is entered. Do not indent
manually.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
January 1, 2020 |
|||
Prepare a schedule of interest expense and bond amortization for 2020–2022. (Round answer to 0 decimal places, e.g. 38,548.)
|
Schedule of Interest Expense and Bond Premium
Amortization |
||||||||
|
|
Cash |
Interest |
Premium |
Carrying |
||||
| 1/1/20 | $ | $ | $ | $ | ||||
| 12/31/20 | ||||||||
| 12/31/21 | ||||||||
| 12/31/22 | ||||||||
Prepare the journal entry to record the interest payment and the
amortization for 2020. (Round answer to 0 decimal
places, e.g. 38,548. If no entry is required, select "No Entry" for
the account titles and enter 0 for the amounts. Credit account
titles are automatically indented when amount is entered. Do not
indent manually.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
December 31, 2020 |
|||
Prepare the journal entry to record the interest payment and the
amortization for 2022. (Round answer to 0 decimal
places, e.g. 38,548. If no entry is required, select "No Entry" for
the account titles and enter 0 for the amounts. Credit account
titles are automatically indented when amount is entered. Do not
indent manually.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
December 31, 2022 |
|||
In: Accounting
|
1. Change all of the numbers in the data area of your worksheet so that it looks like this:
If your formulas are correct, you should get the correct answers to the following questions. (a) What is the net operating income (loss) in Year 1 under absorption costing?(b) What is the net operating income (loss) in Year 2 under absorption costing? (c) What is the net operating income (loss) in Year 1 under variable costing? (d) What is the net operating income (loss) in Year 2 under variable costing? (e) The net operating income (loss) under absorption costing is less than the net operating income (loss) under variable costing in Year 2 because (You may select more than one answer.)
3. Make a note of the absorption costing net operating income (loss) in Year 2. At the end of Year 1, the company’s board of directors set a target for Year 2 of the net operating income of $70,000 under absorption costing. If this target is met, a hefty bonus would be paid to the CEO of the company. Keeping everything else the same from part (2) above, change the units produced in Year 2 to 5,400 units. (a) Would this change result in a bonus being paid to the CEO? Yes or No?(b) What is the net operating income (loss) in Year 2 under absorption costing? (c) Would this doubling of production in Year 2 be in the best interests of the company if sales are expected to continue to be 2,900 units per year? yes or no? |
|||||||||||||||||||||||||||||||||||||||||||||||||
In: Accounting
Problem 1 (Hedging)
A US exporter expects to receive £1 million in 2 months for her exports to the UK. The current exchange rate is US$2.30/£. She is worried that the pound might depreciate over the next 2 months and wants protection against its decline but she also want to benefit from a possible rise in £ over the next 2 months. Put options and call options on the £, with 2-month maturity are available.
What should she do?
Suppose the 2-month put options exercisable at US$2.50/£ are trading at US$0.01. What would be her cash revenue, given your answer in part a), if at the 2 month end the spot exchange rate turns out to be
US$2.00/£
US$3.00/£
What would be her minimum cash revenue, no matter what the spot rate at the end of 2 months turn out to be?
What would be the upfront cost (fee) for undertaking the appropriate options contract?
What would she do if the expected £1 million at the 2-month end are not received and what would be her loss if that happens?
In: Finance