Accounting Week 2
BE9-1
BE9-7
E9-12
P9-7A
BE9-1 The following expenditures
were incurred by Obermeyer Company in purchasing land: cash price $70,000,
accrued taxes $3,000, attorneys’ fees $2,500, real estate broker’s commission
$2,000, and clearing and grading $3,500. What is the cost of the land?
BE9-7 On January 1, 2011, the
Ramirez Company ledger shows Equipment $29,000 and Accumulated Depreciation
$9,000. The depreciation resulted from using the straight-line method with a
useful life of 10 years and salvage value of $2,000. On this date, the company
concludes that the equipment has a remaining useful life of only 4 years with
the same salvage value. Compute the revised annual depreciation
E9-12 The following are selected
2011 transactions of Franco Corporation. Jan. 1 Purchased a small company and
recorded goodwill of $150,000. Its useful life is indefinite. May 1 Purchased
for $90,000 a patent with an estimated useful life of 5 years and a legal life
of 20 years.
P9-7A The intangible assets
section of Redeker Company at December 31, 2011, is presented below.
Problems: Set A 435
(b) Depreciation Expense— building
$570,000; equipment $4,772,000
(c) Total plant assets $61,270,000
Patent ($70,000 cost less $7,000
amortization) $63,000
Franchise ($48,000 cost less
$19,200 amortization) 28,800
Total $91,800
The patent was acquired in
January 2011 and has a useful life of 10 years. The franchise was acquired in
January 2008 and also has a useful life of 10 years. The following cash
transactions may have affected intangible assets during 2012.
Jan. 2 Paid $45,000 legal costs
to successfully defend the patent against infringement by another company.
Jan.–June Developed a new
product, incurring $140,000 in research and development costs. A patent was
granted for the product on July 1. Its useful life is equal to its legal life.
Sept. 1 Paid $50,000 to an
extremely large defensive lineman to appear in commercials advertising the
company’s products. The commercials will air in September and October.
Oct. 1 Acquired a franchise for
$100,000. The franchise has a useful life of 50 years.
Instructions
(a) Prepare journal entries to
record the transactions above.
(b) Prepare journal entries to
record the 2012 amortization expense.
(c) Prepare the intangible assets
section of the balance sheet at December 31, 2012.
TUTORIAL PREVIEW
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All of the
expenditures should be included in the cost of the land. Therefore, the cost
of the land is
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Cash price
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70,000
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Accrued taxes
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3,000
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File name Accounting week
2.xlsx File type: .xlsx PRICE:$12
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