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Mrac [35]
3 years ago
10

Lamont Communications has amortized a patent on a straight-line basis since it was acquired in 2010 at a cost of $50 million. Du

ring 2013 management decided that the benefits from the patent would be received over a total period of 8 years rather than the 20-year legal life being used to amortize the cost. Lamont's 2013 financial statements should include:
A) A patent balance of $50 million.
B) Patent amortization expense of $2.5 million.
C) Patent amortization expense of $5 million.
D) A patent balance of $34 million.
Business
1 answer:
Fittoniya [83]3 years ago
6 0

Answer:

C) Patent amortization expense of $5 million.

Explanation:

Patent acquisition date is 2010

Cost of acquisition = $50 million

Initial Useful life = 20 years

Annual amortization = $50,000,000/20

                                  = $2,500,000

Between 2010 and start of 2013 is 3 years

Carrying value at the start of 2013

= 50,000,000 - 3(2,500,000)

= $42,500,000

If patent would be received over a total period of 8 years rather than the 20-year legal life being used to amortize the cost,

Patent amortization expense in 2013 = $42,500,000/8

                                                              = $5,312,500

This can be estimated as $5 million.

The right option is C) Patent amortization expense of $5 million.

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8 0
3 years ago
Sunland Company gathered the following reconciling information in preparing its July bank reconciliation:
nikdorinn [45]

Answer:

the adjusted cash balance per book is $25,390

Explanation:

The computation of the adjusted cash balance per book is shown below

= Cash balance per books + Notes receivable and interest collected by the bank - Bank charge for check printing - NSF check

= $21,600 + $4,440 - $70 - $580

= $25,390

Hence, the adjusted cash balance per book is $25,390

We simply applied the above formula so that the correct value could come

And, the same is to be considered

7 0
3 years ago
The value of what you owe minus what you owe is called
aliina [53]
Hey there!

I think you meant to type "value of what you <em>own</em> minus what you owe". Let me know if this assumption isn't correct, though I don't know what the value of what you owe is besides... ya know, what you owe. 

The value of what you own is called you assets. This can include anything of value that you own, particularly your pricier possessions. Think of a vintage family heirloom or a highly–priced article of clothing. Assets, though, includes the value <em>everything</em> that you own that you could possibly put a price tag on if you were certain someone would buy it. 

What you owe is called your liability. This is basically any debt that you owe anyone, whether it be your buddy who footed your lunch bill the other day when you didn't have enough cash or a student loan you used to pay for college. 

Your assets minus your liability is called your net worth. This is basically what you are worth in total. This makes sense, since any debt you owe will be taken out of the amount that you are worth or any money that you have.

Net worth will be your answer. 

Hope this helped you out! :-)
4 0
3 years ago
A company is considering the purchase of a new piece of equipment for $117,200. Predicted annual cash inflows from this investme
monitta

Answer:

3.79 years

Explanation:

In the payback, we analyze in how many years the invested amount is recovered. The computation is shown below:

In year 0 = $117,200

In year 1 = $53,000

In year 2 = $21,500

In year 3 = $26,500

In year 4 = $20,500

In year 5 = $23,000

If we sum the first 3 year cash inflows than it would be $101,000

Now we deduct the $101,000 from the $117,200 , so the amount would be $16,200 as if we added the fourth year cash inflow so the total amount exceed to the initial investment. So, we deduct it

And, the next year cash inflow is $20,500

So, the payback period equal to

= 3 years + $16,200 ÷ $20,500

= 3.79 years

In 3.79 years, the invested amount is recovered.  

8 0
3 years ago
On January 1, 2017, Sheridan Company had a balance of $417,000 of goodwill on its balance sheet that resulted from the purchase
Thepotemich [5.8K]

Answer:

patent      301,350 debit

       cash                 301,350 credit

franchise 633,600 debit

        cash               633,600 credit

development expense   189,000 debit

         cash                                    189,000 credit

year-end adjustment:

amortization expense   50,225 debit

         patent                                  50,225 credit

amortization expense   31,680‬ debit

         patent                                  31,680‬ credit

Explanation:

The patent and franchise will be activate as there is a certain possibility to produce positive cashflow in the future.

They will be adjusted at year-end for amortization:

301,350 / 6 = 50,225 amortization on patent

633,600 / 10 = 63,360 amortization on franchise

As it was concede on July 1st then, we will do half-year

63,360 / 2 = 31,680‬

The development cost will be treated as expense as there is no precise information that can determined the development cost which yield a positive outcome.

8 0
3 years ago
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