ACC 1301 Lecture Notes - Lecture 7: Intangible Asset, Income Statement, Asset

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emilypena887

10 Dec 2021

School

UHD

Department

Accounting

Course

ACC 1301

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Develop internally (developing a new product, process, obtaining a protective patent) Note: the way assets are acquired is what the reporting rules depend on. A record at their original cost-plus other costs like legal fees (necessary to get the asset ready) We expense in income statement most of the costs for internally developed intangibles in the period we incur those cost. Exclusive rights to manufacture products and used process. Recorded as intangible asset at purchase price and other costs. A word, slogan, or symbol that identifies a product. Note: a firm can record attorney fees, design costs, legal defense relating to securing the trademark in trademark asset account. Recorded only when one company acquires another company. Recorded by the acquiring company for amount that the purchase price exceeds fair value of acquired company"s identifiable net assets. Depreciation method: assets depreciable cost is allocated over time (cost minus residual value)

Related Questions

A company had three intangible assets at the end of the currentyear:

a.	A patent purchased this year from the company on January 1 for acash cost of $8,400. When purchased, the patent had an estimatedlife of 14 years.
b.	A trademark was registered with the federal government for$7,000. Management estimated that the trademark could be worth asmuch as $180,000 because it has an indefinite life.
c.	Computer licensing rights were purchased this year on January 1for $52,000. The rights are expected to have a four-year usefullife to the company.

1.Compute the acquisition cost of each intangible asset.

	Acquisition cost
Patent
Trademark
Licensing Rights

2. Compute the amortization of each intangible for the currentyear ended December 31.

	Amortization Expenses
Patent
Trademark
Licensing Right

3. Show how these assets and any related expenses should bereported on the balance sheet and income statement for the currentyear

Income statement (partial) for the year ending12/31

Balance sheet (partial) at 12/31
Intangibles

bluealpaca390

1, The term capitalize means to record an expenditure as an expense. True or False.

2, Cash received from the sale of salvaged materials increase the total recorded cost of the land. T or F

3, Most if the costs associated with internally developed intangible assets are recorded as intangible assets on the balance sheet. T or F

4, Goodwill is recorded as an intangible asset on the balance sheet only when it is purchased as part of the acquisition cost of another company. T or F

5, Book value is equal to the original cost of the asset less the toal balance in accumulated depreciation. T or F

6, Impairment occurs when the future cash flows geerated for a long-term asset fall below its fair value. T or F

7, Circle Co purchased a piece of equipment by paying $10,000 cash. There was a shipping cost of $1,200 and a renovation cost of $3,200 to the building to get the space ready for the installation. There was also an installation cost of $1,000. What should be the recorded cost of this piece of equipment?

oliveraven558

P9-7B The intangible assets section of Time Company at December31, 2011, is presented below. Patent ($100,000 cost less $10,000amortization) $ 90,000 Copyright ($60,000 cost less $24,000amortization) 36,000 Total $126,000

The patent was acquired in January 2011 and has a useful life of10 years. The copyright was acquired in January 2008 and also has auseful life of 10 years. The following cash transactions may haveaffected intangible assets during 2012.

Jan. 2 Paid $45,000 legal costs to successfully defend thepatent against infringement by another company.

Jan - June Developed a new product, incurring $230,000 inresearch and development costs. A patent was granted for theproduct on July 1. Its useful life is equal to its legal life.

Sept. 1 Paid $125,000 to an Xgames star to appear in commercialsadvertising the company's products.The commercials will air inSeptember and October.

Oct. 1 Acquired a copyright for $200,000.The copyright has auseful life of 50 years.

Instructions (a) Prepare journal entries to record thetransactions above. (b) Prepare journal entries to record the 2012amortization expense for intangible assets. (c) Prepare theintangible assets section of the balance sheet at December 31,2012. (d) Prepare the note to the financials on Time's intangiblesas of December 31, 2012.

salmonllama721

ACC 1301 Lecture Notes - Lecture 7: Intangible Asset, Income Statement, Asset

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