INTAGIBLES ASSETS

Question 1

calc the amount the patent should be capitalized?

Answer 1

Patent license 40,000
successful right of patent 50,000

                                         90,000

Question 2

Calc, the royalty revenue?

Answer 2

Patents sales over the 4 years are 300,000 x 10% = 30,000

Question 3

calc, the interest expense the loan?

Answer 3

Paid interest total 100,000
prepaid interest 5500
interest payable 8500

interest expense 114,000

Question 4

Calc, trademark intial asset recognition criteria recognize amount?

Answer 4

Purchase price 100,000
Taxes. 5,000
Legal register 10,500

= 115,500

Question 5

Calc, patent the exchange of what the transaction is worth?

Answer 5

When intangible asset is acquired in an exchange transaction intial recognition is at FV

2000 shares x 40 per share = 80,000

Question 6

How are organizational and start up cost treated?

Answer 6

expensed immediately

Question 7

Do we amortize intangible asset?

Answer 7

No

Question 8

How are Legal costs in defense of patent successful litigation treated?

Answer 8

Capitalized and amortized over the shorter of the remaining legal life or estimated useful life

Question 9

How are unsuccessful litigiation of patent treated?

Answer 9

expensed as incurred

Question 10

CALC THE AMOUNT NET OF ACCUMULATED AMORTIZATION ?

Answer 10

COST RELATED TO PATENT 136,000
PATENT EQUAL 34,000
PATENTS USEFUL LIFE 20
ESTIMATED ECONOMIC LIFE 10

                                                  3,400
                                                         6
                                                       12
                                                  1,700

report as patent net of accumulated amortization 32,300

Question 11

What happens to litigation costs when patents are successfully treated?

Answer 11

litigation cost would be capitalized if the patent is right and successfully defended

Question 12

Calc, the royalty income?

Answer 12

We need Gross Sales 600,000 x (100%-1%) 99%

600,000 x 99% = 594,000

594,000 x 10% = 59,400

Question 13

Should legal fees to obtain a franchise and to defend a trademark successfully be capitalized?

Answer 13

Both legal fees to obtain franchise and to defend a trademark successfully

Question 14

Calc, the franchise related amortization for december balance sheet?

Answer 14

The franchise should capitalize the costs of acquiring the franchise. The calc should include the legal fees to acquire the asset and future payment of revenue for the franchise services

60,000 / 5 years = 12,000

60,000 - 12,000 = 48,000

Question 15

Calc, the interest expense for clay report?

Answer 15

Clay paid prepaid interest

last year 23,500 - 18,000 this year = 5,500 Prepaid interest

Prepaid Interest 5,500

This year 53,500 - 45,000 = 8500

Interest Expense

This Year 53,500 - 45,000 = 8500

Paid Interest 100,000 + 5500 + 8500 = 114,000

Question 16

Calc, the interest expense for the agreement involving discounts and notes?

Answer 16

Here we will first subtract the prepaid interest between

Last year this year
23,000 - 18,000 = 5,500

Last year This year
45,500 - 53,500 = 8,500

100,000 cash payments
5,500
8,500

= 114,000 interest expense

Question 17

Calc, the reported capitalized interest at December 31, Year 8?

Answer 17

2,000,000 x .05 = 1,000,000
1,000,000 x 12% = 102,000 total amount of interest incurred

Question 18

Calc, the company record as the intangible assets cost?

Answer 18

Cash 50,000
Land 41,000
Legal fees 3,000

= intangible 94,000

Question 19

Calc, the prepaid expenses for the finite lived intangible assets and other issues?

Answer 19

Annual premium 72,000 x 50% = 36,000

Paid real estate taxes 24,000 x 75% = 18,000

36,000 + 18,000 = 54,000

Question 20

Are trademarks amortized?

Answer 20

No they’re not amortized because they have a indefinite useful life

Question 21

Calc the prepaid insurance and insurance expense?

Answer 21

Prepaid Insurance

3600 / 36 (12*3) = 100 x 2 = 200

3600 - 200 = 3400

Insurance Expense

4410 - 3600 = 810 + 90 = 900

900 + 200 = 1100

Question 22

Are legal fees to obtain a franchise and to defend a trademark successfully capitalized?

Answer 22

Yes legal fees to obtain a franchise & to defend a trademark successfully

Question 23

Calc, the comprehensive income reported for the current year?

Answer 23

Net Income - 86,500

Unrealized AFS securities 8100
Unrealized foreign currency transaction
3400 8100 - 3400 = 4700 (1-30%) 0.7
4700 x 0.7 = 3290

86,500 net income - 3290 other comprehesive income = 83,210

Question 24

Calc the interest expense that should be reported for the year?

Answer 24

Start off with the 100,000 paid interest totaling

Prepaid interest last year 23,500 - 18,000 this year

23,500 - 18,000 = 5,500

Interest payable last year 45,500 - 53,500 this year

45,500 - 53,500 = 8500

100,000 + 5,500+ 8500 = 114,000 interest expense

Question 25

Calc, the capitalized interest report?

Answer 25

2 million was incurred x .5 = 1,000,000 x 12% = 120,000

Question 26

Calc, the amortization expense fro the year?

Answer 26

50,000 historial cost - 10,000 residual value = 40,000

40,000 / 10 = 4,000

Question 27

Calc, the interest capitalized year end?

Answer 27

JAN 1 120,000 X 12 / 12 = 120,000
SEPT 1 150,000 X 9 / 12 = 50,000

= 170,000 X 10% = 17,000 INTEREST CAPITALIZED

Remember ignore the company obtained the 300,000

Question 28

Calc, the carrying amount of inventory that spin purchased from pard?

Answer 28

Part 1 - calc the intraentity

REVENUE PARD 200,000
SPIN 140,000
CONSOLIDATED 308,000

200,000 + 140,000 - 308,000 = 32,000

Part 2 - using the COGS calc the percentage

200,000 revenue
150,000 COGS

= 0.75 X 32,000
= 24,000 CARRYING AMOUNT

24,000 X 37.5% = 9,000