Use the following to answer questions 31 – 32 Last year T, Inc., had the following expenditures related to developing its trademark: General advertising costs Advertising specifically focused on trademark Legal fees to register trademark $224,000 45,600 550 Legal fees for successful defense of new trademark 75,000 Total $345,150 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as costs of the trademark. Management contends that all the costs increase the value of the trademark and, therefore, should be capitalized. 31. Which of the above costs should NOT be capitalized? 32. $ capitalized to the trademark account? Chapter 7 What is the total cost that should be Page 7-1
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- A company had the following expenditures related to developing its trademark. General advertising costs Advertising specifically focused on trademark development Legal fees to register trademark Registration fees for the trademark Legal fees for successful defense of the new trademark Total $ 300,000 120,000 52,000 38,000 33,000 $ 543,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as costs of the trademark. Management contends that all of the costs increase the value of the trademark; therefore, all the costs should be capitalized. Required: 1. Which of the above costs should the company capitalize to the Trademark account in the balance sheet? 2. Which of the above costs should the company report as expense in the income statement? Total costs capitalized Total costs expensedGeneral advertising costs Advertising specifically focused on the trademark Legal fees to register trademark Registration and design fees for the trademark Legal fees for successful defense of the new trademark Total S 310,000 115,000 59,400 32,000 33,800 $ 550,200 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as costs of the trademark. Management contends that all of the costs increase the value of the trademark; therefore, all the costs should be capitalized. Required: 1. Which of the above costs should the company capitalize to the Trademark account in the balance sheet? 2. Which of the above costs should the company report as expense in the income statement? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Which of the above costs should the company capitalize to the Trademark account in the balance sheet? Total costs capitalizedAssume REH AG, a hypothetical company, incurs expenditures of AC1,000 per month during the fiscal year ended December 31, 2019 to develop software for internal use. Under IFRS, the company must treat the expenditures as an expense until the software meets the criteria for recognition as an intangible asset, after which time the expenditures can be capitalized as an intangible asset. 1 What is the accounting impact of the company being able to demonstrate that the software met the criteria for recognition as an intangible asset on February 1 versus December 1? 2 How would the treatment of expenditures differ if the company reported under US GAAP and it had established in 2018 that the project was likely to be completed and the software used to perform the function intended?
- Maylen Printers (MP) manufactures printers. Assume that MP recently paid $800,000 for a patent on a new laser printer. Although it gives legal protection for 20 years, the patent is expected to provide a competitive advantage for only ten years. Read the fequirements Requirement 1. Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for the first full year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) (a) Record the purchase of the patent. Date Accounts and Explanation Debit Credit (O Time Course Chat O GB V 19:10 DELLAssume REH AG, a hypothetical company, incurs expenditures of €1,000 per monthduring the fiscal year ended 31 December 2009 to develop software for internal use.Under IFRS, the company must treat the expenditures as an expense until the softwaremeets the criteria for recognition as an intangible asset, after which time the expenditurescan be capitalized as an intangible asset.1. What is the accounting impact of the company being able to demonstrate that thesoftware met the criteria for recognition as an intangible asset on 1 February versus1 December?2. How would the treatment of expenditures diff er if the company reported under U.S.GAAP and it had established in 2008 that the project was likely to be completed?Joni Marin Inc. has the following amounts reported in its general ledger at the end of the current year. Organization costs $24,400 Trademarks 16,900 Discount on bonds payable 37,400 Deposits with advertising agency for ads to promote goodwill of company 12,400 Excess of cost over fair value of net identifiable assets of acquired subsidiary 77,400 Cost of equipment acquired for research and development projects; the equipment has an alternative future use 87,400 Costs of developing a secret formula for a product that is expected to be marketed for at least 20 years 83,800 (a)On the basis of this information, compute the total amount to be reported by Marin for intangible assets on its balance sheet at year-end. Total amount reported for intangible assets __________
- During the past two years, through extensive advertising and improved customer relations, jEAN Corporation estimated that it had developed customer goodwill worth $500,000. For the current year, determine the amount of goodwill Orange may amortize. a.$26,667 b.$-0- c.$16,667 d.$33,3336. Bluestone Company had three intangible assets at the end of the current year: a. A patent purchased this year from Miller Co. on January 1 for a cash cost of $6,000. When purchased, the patent had an estimated life of 12 years. b. A trademark was registered with the federal government for $4,000. Management estimated that the trademark could be worth as much as $120,000 because it has an indefinite life. c. Computer licensing rights were purchased this year on January 1 for $42,000. The rights are expected to have a six-year useful life to the company. polnts еВook Print Required: References 1. Compute the acquisition cost of each intangible asset. 2. Compute the amortization of each intangible for the current year ended December 31. 3. Show how these assets and any related expenses should be reported on the balance sheet and income statement for the current year. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Reg 3B Compute the acquisition…The following information is available for K Company for the year ended 2021. It incurred organization costs of $45,200. • It purchased trademarks for $20,200. It incurred $31,200 for development phase activities that meets all the 6 criteria for development phase. It paid $8,100 to the advertising agency in advance for promoting goodwill of the company through ad campaign. • It acquired equipment costing $151,400 for R&D projects. The equipment is having alternative future use. • It made payment amounting to $12,900 for a favorable lease. The term of lease is 10 years. Determine the total amount for K to report as intangible assets on its statement of financial position on December 31, 2021. (Note: Assume K uses IFRS to prepare its financial statements.) A) $109,500 B) $179700 C) $100,800 D) $64,300
- Purchase price Nonrefundable value added tax Training of personnel on the use of new trademark Research expenditures associated with the purchase of the new trademark Legal cost incurred to register the new trademark Administrative salaries 1,000,000 50,000 70,000 240,000 105,000 120,000 What amouont should be reported as initial cost of the trademark? 1,000,000 b. 1,155,000 c. 1,465,000 a.Joni Skysong Inc. has the following amounts reported in its general ledger at the end of the current year. Organization costs $23,700 Trademarks 15,500 Discount on bonds payable 36,700 Deposits with advertising agency for ads to promote goodwill of company 11,700 Excess of cost over fair value of net identifiable assets of acquired subsidiary 76,700 Cost of equipment acquired for research and development projects; the equipment has an alternative future use 86,700 Costs of developing a secret formula for a product that is expected to be marketed for at least 20 years 82,400 (a) On the basis of this information, compute the total amount to be reported by Skysong for intangible assets on its balance sheet at year-end. Total amount reported for intangible assetsExercise 10-26 (Algo) Research and development [LO10-8] In 2021, Space Technology Company modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Acquisition of equipment Testing and modification of the prototype Legal and other fees for patent application on the new communication system Legal fees for successful defense of the new patent $2,700,000 820,000 440,000 74,000 340,000 54,000 34,000 $4,462,000 Total The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $24,000. During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above as costs of the patent. Management contends that the device simply represents an improvement of the existing communication system of the satellite and, therefore, should be…