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Lecture 2

BADM*1060Lecture 2: CHAPTER 9 - part 2
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3 Pages
50 Views
Summer 2017

Department
Business
Course Code
BADM*1060
Professor
Howard Leaman
Lecture
2

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Chapter 9 Part B Intangible Assets
January 1st, 2016
Buy a Patent for $100,000
Estimated life: 10 years
July 1st, 2016, defend the Patent for $11,400
- Lose case journal entry: Impairment loss 100,000
Patent 100,000
Legal Expense 11,400
Cash 11,400
- Win case journal entry: Amortization Expense
Accumulated Amortization
Patent Amort Exp/year = cost est sal / est life
= $100,000/10 years
Defense Amort Exp/year = cost sal/life
=$11,400 0 / 9 ½ years
= $100/month
10,000
+ 6,000
$10,600
Goodwill
Company A Buy’s Company B for $80,000
Company B
- Assets $100,000
- Liabilities 30,000
- Net Worth $ 70,000
Goodwill = $10,000
CHAPTER 9 Part 2 Current Liabilities
1) On October 31, 2014, BADM1060 Inc. sold old delivery equipment for $20,000. The delivery
equipment was purchased on January 1, 2011, for $54,000 and was estimated to have a $6,000
residual value at the end of its 8-year life. Depreciation on the delivery equipment has been
recoded through December 31, 2013. Prepare the journal entry to record the disposal of the
delivery equipment given that he company uses the straight-line method of depreciation.
Depreciation Expense /year cost estimated salvage ÷ estimated life
54,000 6,000 = 48,000 ÷ 8 = 6,000/year Equipment
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Description
Chapter 9 – Part B – Intangible Assets January 1 , 2016 Buy a Patent for $100,000 Estimated life: 10 years st July 1 , 2016, defend the Patent for $11,400 - Lose case journal entry: Impairment loss 100,000 Patent 100,000 Legal Expense 11,400 Cash 11,400 - Win case journal entry: Amortization Expense Accumulated Amortization Patent Amort Exp/year = cost – est sal / est life = $100,000/10 years Defense Amort Exp/year= cost – sal/life =$11,400 – 0 / 9 ½ years = $100/month 10,000 + 6,000 $10,600 Goodwill Company A Buy’s Company B for $80,000 Company B - Assets $100,000 - Liabilities 30,000 - Net Worth $ 70,000 Goodwill = $10,000 CHAPTER 9 – Part 2 … Current Liabilities 1) On October 31, 2014, BADM1060 Inc. sold old delivery equipment for $20,000. The delivery equipment was purchased on January 1, 2011, for $54,000 and was estimated to have a $6,000 residual value at the end of its 8-year life. Depreciation on the delivery equipment has been recoded through December 31, 2013. Prepare the journal entry to record the disposal of the delivery equipment given that he company uses the straight-line method of depreciation. Depreciation Expense /year – cost – estimated salvage ÷ estimated life 54,000 – 6,000 = 48,000 ÷ 8 = 6,000/year Equipment Cash $20,000 54,000 Accumulated Dep – equipment $23,000 Loss on Disp 11,000 $54,000 Equipment 54,000 Depreciation Expense $6,000 Accumulated Depreciation $6,000 2) GH Ltd. Bought equipment for $70,000 on January 1, Year 1. GH Ltd. Estimated the useful life to be 5 years with an estimated salvage vale of $5,000, and the straight-line method of depreciation will be used. On January 1, Year 2, GH Ltd. Decides that the business
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