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Free_Kalibri [48]
3 years ago
15

On January 1, 2017, Sheridan Company had a balance of $417,000 of goodwill on its balance sheet that resulted from the purchase

of a small business in a prior year. The goodwill has an indefinite life. During 2017, the company had the following additional transactions. Jan 2 : Purchased a patent (6-year life) $301,350. July 1 : Acquired a 10-year franchise; expiration date July 1, 2027, $633,600. Sep 1 : Research and development costs $189,000. Prepare the necessary entries to record the transactions related to intangibles. All costs incurred were for cash.
Business
1 answer:
Thepotemich [5.8K]3 years ago
8 0

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.

You might be interested in
For the year ended December 31, Ion Corp. had cash inflows of $25,000 from the purchases, sales, and maturities of held-to-matur
77julia77 [94]

Answer:

The amount of net cash flow from investing activities that ion should report in its cash flow statement is $65,000.

Explanation:

A cash flow statement is one of the financial statements which will tell how changes in income statement and balance sheet accounts will affect the company's cash inflow and outflow. This statement will break down the analysis in to operating , investing and financing activities.

For taking out the net cash flow in investing activities, purchase activities are added and sale activities are subtracted and from the given information in the question , it is clear that both are purchasing activities, therefore

NET CASH FLOW FROM INVESTING = $25,000 + $40,000

                                                              = $65,000

5 0
2 years ago
Assume that total output in a two-good economy in 2018 consists of 50,000 apples and 2 Tesla cars, with prices of 1$ per apple a
KiRa [710]

Answer:

30%

Explanation:

GDP is the sum of all products and services produced by an economy over a given period of time. In an economy with only two products, GDP will be the sum of the quantity produced by each product at its given price.

Thus, the 2018 GDP will be:

Apples: 50,000 units x $ 1 (price) = $ 50,000

Tesla: 2 (Units) x $ 25,000 (Price) = $ 50,000

GDP 2018 = $ 50,000 + $ 50,000 = $ 100,000

The GDP variation between two years is calculated by adopting a year whose price will be the basis of the calculation, usually the first year chosen, in this case by 2018. Thus, after calculating the GDP of the base year (2018), the GDP of the The following year (2019) will be calculated using the base year price. In other words, let's calculate the 2019 GDP with the quantities sold in 2019, but with the 2018 prices. This is called the real GDP calculation, which really matters for comparison between two years.

<em>Note: Real GDP calculation is required to compare GDP developments between two or more periods. If the nominal GDP (price x quantity of each year) were calculated it would not be possible to compare properly, because in this case the effects of inflation would be infiltrated in the account. Through the calculation of real GDP inflation is isolated, as it uses the same price to calculate GDP each year, in this case the base year.</em>

Apples: 55,000 units x $ 1 (base price) = $ 55,000

Tesla: 3 (Units) x $ 25,000 (Base Price) = $ 75,000

GDP 2019 = $55000+ $75000 = $ 130,000

To calculate the percentage change in GDP simply calculate the difference between the two periods divided by the base year GDP (2018) and multiply by 100.

% GDP Change = (130,000-100,000) / (100,000) * 100 = (30,000 / 100,000) * 1000 = 0.3 * 100 = 30%

Therefore, the GDP percentage growth between 2018 and 2019 was 30%.

6 0
3 years ago
At an output level of 84,000 units, you calculate that the degree of operating leverage is 1.80. Suppose fixed costs are $180,00
Irina-Kira [14]

Answer:

The operating cash flow is $196,071 and the new degree of operating leverage is 1.918

Explanation:

a. The computation of operating cash flow is shown below:

By using the information, first we have to calculate the contribution amount.

We know that the operating leverage equals to

Operating leverage = Contribution ÷ EBIT

And, Contribution  = Fixed cost + EBIT

So,

1.80 =  Fixed cost + EBIT ÷ EBIT

1.80 EBIT - EBIT = Fixed cost

0.80 EBIT = $180,000

So, EBIT = $180,000 ÷ 0.80 = $225,000

And, the contribution = $180,000 + $225,000 = $405,000

Contribution is calculated for 84,000 units but we have to compute for 78,000 units

So, contribution for 78,000 units will be equals to

= $405,000 × 78,000 ÷ 84,000

= $376,071.43

So, the operating cash flow would be

= $376,071.43 - $180,000

= $196,071.43

b. The new degree of operating leverage equals to

=  $376,071.43 ÷ $196,071.43

= 1.918

Hence, the operating cash flow is $196,071 and the new degree of operating leverage is 1.918

5 0
3 years ago
The salvage value is not considered when using Modified Accelerated Cost Recovery System (MACRS) depreciation methods. A. True B
amm1812

Answer:

A. True

Explanation:

The Modified Accelerated Cost Recovery System (MACRS) can be defined as a depreciation system that avails business owners or companies the ability and opportunity to recover or recoup the cost basis of physical assets that have experienced deterioration over a specific period of time.

Depreciation can be defined as the reduction of cost of a fixed asset systematically until the value of the asset becomes zero.

In the United States of America, the Modified Accelerated Cost Recovery System (MACRS) is used mainly for tax purposes because it gives room for faster depreciation of a physical asset in its first years or initial usage and reduces depreciation as it is being used over a long period of time.

The salvage value is not considered when using Modified Accelerated Cost Recovery System (MACRS) depreciation methods.

3 0
2 years ago
A hair salon acquired 100 new customers last year. Cost in the marketing and sales were as follows:
Anestetic [448]

If a hair salon acquired 100 new customers last year. Cost in the marketing and sales were are marketing Costs  $1,000, Sales Costs $10,000  and Salaries $96,000.What the customer acquisition cost will be is $1,070

Using this formula

Customer acquisition cost=Sales costs+ Marketing costs +Salaries ÷ Number of customers acquired

Where:

Marketing Costs =$1,000

Sales Costs = $10,000

Salaries = $96,000

Number of customers acquired=100

Let plug in the formula

Customer acquisition cost=$1,000+$10,000+$96,000÷100

Customer acquisition cost=$107,000÷100

Customer acquisition cost=$1,070

Inconclusion if a hair salon acquired 100 new customers last year. Cost in the marketing and sales were are marketing Costs $1,000, Sales Costs $10,000  and Salaries $ 96,000. What the customer acquisition cost will be is $1,070

Learn more here:

brainly.com/question/18119725

7 0
2 years ago
Read 2 more answers
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