Accounting Chpt 9

A company has the following assets: Buildings and Equipment, less accumulated depreciation of $400000 $23000000 Copyrights 1500000 Patents 3000000 Land 5000000 The total amount reported under Property, Plant, and Equipment would be

$28000000. $23000000 + $5000000 = $28000000 (Bldg. & Equip. + Land)

Given the following account balances at year end, compute the total intangible assets on the balance sheet of Janssen Enterprises. Cash $1500000 Accounts Receivable 1000000 Trademarks 1200000 Goodwill 2500000 Research & Development Costs 2000000

$3700000. $1200000 + $2500000 = $3700000 (Trade. + Good.)

Equipment costing $105000 with a salvage value of $21000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 6 years and no change in the salvage value, the depreciation expense (rounded) for Year 3 would be

$15750 [($105000 - $21000) ÷ 8] × 2 = $21000; [($105000 - $21000) - $21000] ÷ (6 - 2) = $15750 [(Cost - sal. val.) ÷ 8] × 2= A/D; [(Cost - A/D) - sal. val.] ÷ (6 - 2)

On May 1, 2017, Irwin Company purchased the copyright to Quick Computer Tutorials for $120000. It is estimated that the copyright will have a useful life of 5 years. The amount of amortization expense recognized for the year 2017 would be

$16,000 ($120000 ÷ 5) × 8/12 = $16000 (Cost ÷ 5 yrs) × 6/12

Burke Company purchases land for $180000 cash. Burke assumes $5000 in property taxes due on the land. The title and attorney fees totaled $2000. Burke has the land graded for $4400. They paid $20000 for paving of a parking lot. What amount does Burke record as the cost for the land?

$191400 $180000 + $5000 + $2000 + $4400 = $191400 (Pur. price + taxes + attor. fees. + grad. cost.)

Hopson Company incurred $900000 of research and development costs in its laboratory to develop a new product. It spent $120000 in legal fees for a patent granted on January 2, 2017. On July 31, 2017, Hopson paid $90000 for legal fees in a successful defense of the patent. What is the total amount that should be debited to Patents through July 31, 2017?

$210000. $120000 + $90000 = $210000 (Leg. fees + def. leg. fees)

Stine Company purchased machinery with a list price of $96000. They were given a 10% discount by the manufacturer. They paid $600 for shipping and sales tax of $4500. Stine estimates that the machinery will have a useful life of 10 years and a residual value of $30000. If Stine uses straight-line depreciation, annual depreciation will be

$6150 [($96000 × 0.90) + $600 + $4500 - $30000] ÷ 10 = $6150 ([List price × (1 - 0.10)] + ship. sal. tax - sal. val.) ÷ 10 yrs.

Carpino Company purchased equipment and these costs were incurred: Cash price $75000 Sales taxes 3500 Insurance during transit 750 Installation and testing 1500 Total costs $80750 What amount should be recorded as the cost of the equipment?

$80,750 $75000 + $3500 + $750 + $1500 = $80750 (cash price + sal. tax. + insur. + insut.)

During 2017, Ronald Corporation reported net sales of $2000000, net income of $900000, and depreciation expense of $100000. Ronald also reported beginning total assets of $1000000, ending total assets of $1500000, plant assets of $800000, and accumulated depreciation of $500000. Ronald's asset turnover (rounded) is

1.60 times $2000000 ÷ [($1000000 + $1500000) ÷ 2] = 1.60 Net sal. ÷ [(beg. tot. assets + end. tot. assets) ÷ 2)]

A plant asset with a cost of $600000 and accumulated depreciation of $570000 is sold for $70000. What is the amount of the gain or loss on disposal of the plant asset?

40,000 gain $70000 - ($600000 - $570000) = ($40000) (sell. price - (cost - A/D))

Using the following data for Stevenson Industries, compute the return on assets (rounded). Net Income $180000 Total Assets 12/31/17 2410000 Total Assets 12/31/16 1980000 Net Sales 250000

8.2% $180000 ÷ [($2410000 + $1980000) ÷ 2] = 8.2 Net Income. ÷ [(end. tot. assets + beg. tot. assets) ÷ 2]

A loss on disposal of a plant asset is reported in the financial statements

in the Other Expenses and Losses section of the income statement.

Compton Inc. made a $500 ordinary repair to a piece of equipment. Compton's accountant debited this amount to the asset account, Equipment and credited Cash. Was this the correct entry and if not, why not?

No, the correct entry would be a debit to Maintenance and Repairs Expense and a credit to Cash.

The balance in the Accumulated Depreciation account represents the

amount charged to expense since the acquisition of the plant asset.

Plant assets are ordinarily presented in the balance sheet

at cost less accumulated depreciation.

Copyrights are granted by the federal government (For how long)

for the life of the creator plus 70 years.

Goodwill a. can be purchased and charged directly to stockholders' equity. b. is only recorded when the purchase of an entire business occurs. c. can be sold by itself to another company. d. may be expensed upon purchase if desired.

is only recorded when the purchase of an entire business occurs.

Research and development costs

must be expensed when incurred under generally accepted accounting principles.

If disposal of a plant asset occurs during the year, depreciation is

recorded for the fraction of the year to the date of the disposal.

Intangible assets

should be reported as a separate classification on the balance sheet.