INTAGIBLES ASSETS Flashcards
calc the amount the patent should be capitalized?
Patent license 40,000
successful right of patent 50,000
90,000
Calc, the royalty revenue?
Patents sales over the 4 years are 300,000 x 10% = 30,000
calc, the interest expense the loan?
Paid interest total 100,000
prepaid interest 5500
interest payable 8500
interest expense 114,000
Calc, trademark intial asset recognition criteria recognize amount?
Purchase price 100,000
Taxes. 5,000
Legal register 10,500
= 115,500
Calc, patent the exchange of what the transaction is worth?
When intangible asset is acquired in an exchange transaction intial recognition is at FV
2000 shares x 40 per share = 80,000
How are organizational and start up cost treated?
expensed immediately
Do we amortize intangible asset?
No
How are Legal costs in defense of patent successful litigation treated?
Capitalized and amortized over the shorter of the remaining legal life or estimated useful life
How are unsuccessful litigiation of patent treated?
expensed as incurred
CALC THE AMOUNT NET OF ACCUMULATED AMORTIZATION ?
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
What happens to litigation costs when patents are successfully treated?
litigation cost would be capitalized if the patent is right and successfully defended
Calc, the royalty income?
We need Gross Sales 600,000 x (100%-1%) 99%
600,000 x 99% = 594,000
594,000 x 10% = 59,400
Should legal fees to obtain a franchise and to defend a trademark successfully be capitalized?
Both legal fees to obtain franchise and to defend a trademark successfully
Calc, the franchise related amortization for december balance sheet?
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
Calc, the interest expense for clay report?
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
Calc, the interest expense for the agreement involving discounts and notes?
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
Calc, the reported capitalized interest at December 31, Year 8?
2,000,000 x .05 = 1,000,000
1,000,000 x 12% = 102,000 total amount of interest incurred
Calc, the company record as the intangible assets cost?
Cash 50,000
Land 41,000
Legal fees 3,000
= intangible 94,000
Calc, the prepaid expenses for the finite lived intangible assets and other issues?
Annual premium 72,000 x 50% = 36,000
Paid real estate taxes 24,000 x 75% = 18,000
36,000 + 18,000 = 54,000
Are trademarks amortized?
No they’re not amortized because they have a indefinite useful life
Calc the prepaid insurance and insurance expense?
Prepaid Insurance
3600 / 36 (12*3) = 100 x 2 = 200
3600 - 200 = 3400
Insurance Expense
4410 - 3600 = 810 + 90 = 900
900 + 200 = 1100
Are legal fees to obtain a franchise and to defend a trademark successfully capitalized?
Yes legal fees to obtain a franchise & to defend a trademark successfully
Calc, the comprehensive income reported for the current year?
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
Calc the interest expense that should be reported for the year?
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
Calc, the capitalized interest report?
2 million was incurred x .5 = 1,000,000 x 12% = 120,000
Calc, the amortization expense fro the year?
50,000 historial cost - 10,000 residual value = 40,000
40,000 / 10 = 4,000
Calc, the interest capitalized year end?
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
Calc, the carrying amount of inventory that spin purchased from pard?
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
