intermediate accounting 2- final exam

companies should test indefinite life intangible assets at least annually for

impairment

Thompson company incurred research and development cost of $100,000 and legal fees of $40,000 to acquire a patent. the patent has a legal life of 20 years and a useful life of 10 years. what amount should Thompson record as patent amortization expense in the first year?

$40,000/10=4,000

when a corporation issues its capital stock in payment for services received, the least appropriate basis for recording the transaction is the

- par value of the shares issued

blue sky company's 12/31/18 balance sheet reports assets of $7,000,000 and liabilities of 2,800,000. all of blue sky's assets book values approximate their fair value, expect for land, which has a fair value that is $420,00 greater than its book value. on 12/31/18. Horace wimp corporation paid $7,140,000 to acquire blue sky. what amount of goodwill should Horace wimp record as a result of this purchase

1.) (7,000,000+$420,000)-$2,800,000=$4,620,00 2.) 7,140,000-4,620,000=$2,520,000 answer: $2,520,000

a company gives each of its 75 employees (assume they were all employed continuously through 2017 and 2018) 12 days of vacation a year if they are employe at the end of the year. the vacation accumulates and may be taken starting January 1 of the next year. the employees work 8 hours per day. in 2017, they made $21 per hour and in 2018 they made $24 per hour. during 2018, they took an average of 9 days of vacation each. the company policy is to record the liability existing at the end of each year at the wage rate for that year. what amount of vacation liability (balance in Salaries and Wage payable account) would be reflected on the 2017 and 2018 balance sheet, respectively?

75X12X8X21=151,200 (75X3X8X21)+(75X12X8X24)=$210,600 answers: 151,200; 210,600

the following information is available for Barkley company patents: cost: $3,440,000 carrying amount: 1,920,000 expected future net cash flows: 1,600,000 fair value: 1,300,000

Carrying amount - fair value 1,920,000- 1,300,000= 620,000

bargain surplus collected a sum of $375,000 from customer for sales transactions in the month of October. the sales are subject to a 6% sales tax that was included in the amount collected from customers. which of the following would be included in the summary journal entry to reflect the sale transactions?

Sales tax= 375,000- (375,000/1.06)=21,226 - credit sales taxes payable for $21,226

muggs co. includes one coupon in each bag of dog food it sells. in return for eight coupons customers receive a leash. the leash cost mugs $4 each. mugs estimates that 45 percent of the coupons will be redeemed. data for 2017 and 2018 are as follows year 2017 2018 bags of dog food. 500,000 600,000 leashes purchased 18,000 22,000 coupons redeemed 120,000 150,000 the premium liability balance at December 31, 2017 is

[((500,00X.45)-120,000) / 8] * 4= 52,500 - $120,000 is no longer a liability

an early extinguishment of bonds payable, which were originally issued at a premium, is made by purchase of the bonds between interest dates, at the time of reacquisition - any costs of issuing the bonds must be amortized up to the purchase date - the premium must be amortized up to the purchase date -interest must be accrued from the last interest date to the purchase date - all of these answer are correct

all of these answer are correct

which of the following may be a current liability -withheld income taxes -deposits received from customers -unearned revenue -all of these answers are correct

all of these answer are correct

the cost of successfully defending a patent suit should be

amortized over the remaining estimated useful life of the patent

which of these is not included in an employers payroll tax expense -F.I.C.A (social security) taxes -federal unemployment taxes -state unemployment taxes -federal income taxes

federal income taxes

a liability for compensated absences such as vacations, for which it is expected to be used by employees

be accrued during the period when earned

if market interest rate is great than the coupon rater on the date of issuance bonds will se

discount

cost incurred internally to create intangibles are

expensed as incurred

which of the following is not an intangible asset - trade name -research and development costs -franchise -copyrights

research and development

if a company chooses the fair value option, a decrease in the fair value of the liability is recored by crediting

unrealized holding gain/loss-income