Intermediate Acc quiz 1
Blossom Company incurred research and development costs of $98000 and legal fees of $38000 to develop a patent. The patent has a legal life of 20 years and a useful life of 10 years. What amount should Blossom record as Patent Amortization Expense in the first year?
$ 3800.
A company issues $15500000, 9.8%, 20-year bonds to yield 10% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $15234034. What is interest expense for 2021, using straight-line amortization?
$1532298
A company issues $16400000, 9.8%, 20-year bonds to yield 10% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $16118591. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, 2020 balance sheet?
$16123367
Oriole Company issues $20300000 of 10-year, 12% bonds on March 1, 2020 at 97 plus accrued interest. The bonds are dated January 1, 2020, and pay interest on June 30 and December 31. What is the total cash received on the issue date?
$20097000
On December 31, 2020, Marigold Corp. has $6000000 of short-term notes payable due on February 14, 2021. On January 10, 2019, Marigold arranged a line of credit with Beach Bank which allows Marigold to borrow up to $4520000 at one percent above the prime rate for three years. On February 2, 2021, Marigold borrowed $3610000 from Beach Bank and used $1490000 additional cash to liquidate $5090000 of the short-term notes payable. The amount of the short-term notes payable that should be reported as current liabilities on the December 31, 2020 balance sheet which is issued on March 5, 2021 is
$2390000.
Ivanhoe Company's 12/31/21 balance sheet reports assets of $6900000 and liabilities of $2700000. All of Ivanhoe's assets' book values approximate their fair value, except for land, which has a fair value that is $410000 greater than its book value. On 12/31/21, Oriole Corporation paid $7030000 to acquire Ivanhoe. What amount of goodwill should Oriole record as a result of this purchase?
$2420000
Crane Corporation purchased a patent for $117000 on September 1, 2019. It had a useful life of 10 years. On January 1, 2021, Crane spent $21000 to successfully defend the patent in a lawsuit. Crane feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2021?
$24480.
On January 1, 2020, Sheridan Company issued eight-year bonds with a face value of $6080000 and a stated interest rate of 8%, payable semiannually on June 30 and December 31. The bonds were sold to yield 10%. Table values are: Present value of 1 for 8 periods at 8% 0.540Present value of 1 for 8 periods at 10% 0.467Present value of 1 for 16 periods at 4% 0.534Present value of 1 for 16 periods at 5% 0.458Present value of annuity for 8 periods at 8% 5.747Present value of annuity for 8 periods at 10% 5.335Present value of annuity for 16 periods at 4% 11.652Present value of annuity for 16 periods at 5% 10.838 The present value of the principal is
$2784640.
Cullumber Corporation acquired End-of-the-World Products on January 1, 2020 for $6450000, and recorded goodwill of $1210000 as a result of that purchase. At December 31, 2021, the End-of-the-World Products Division had a fair value of $4789000. The net identifiable assets of the Division (including goodwill) had a carrying value of $5490000 at that time. What amount of loss on impairment of goodwill should Cullumber record in 2021?
$701000
Crane borrowed $690000 on October 1, 2020 and is required to pay $715000 on March 1, 2021. What amount is the note payable recorded at on October 1, 2020 and how much interest is recognized from October 1 to December 31, 2020?
$715000 and $15000.
A company issues $14900000, 5.8%, 20-year bonds to yield 6% on January 1, 2020. Interest is paid on June 30 and December 31. The proceeds from the bonds are $14555590. Using effective-interest amortization, how much interest expense will be recognized in 2020?
$873473
If a company chooses the fair value option, a decrease in the fair value of the liability is recorded by crediting
Unrealized Holding Gain/Loss-Income.
Concord Corporation retires its $620000 face value bonds at 103 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date is $596750. The entry to record the redemption will include a
credit of $23250 to Discount on Bonds Payable.
Marigold Corp. signed a three-month, zero-interest-bearing note on November 1, 2020 for the purchase of $500700 of inventory. The face value of the note was $514500. Marigold used a "Discount of Note Payable" account to initially record the note. Assuming that the discount will be amortized equally over the 3-month period and that there was no adjusting entry made for November, the adjusting entry made at December 31, 2020 will include a
debit to Interest Expense for $9200.