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Monday, November 15, 2010

Valix Finacc vol 1 Problem 20-5

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 20 Problem 20-5



2008     Research and development expense                         250,000
                        Cash                                                                                                    250,000
                                                                                                                                       
2009     Patent                                                                                       60,000
                        Cash                                                                                                      60,000

            Amortization of patent                                                               6,000
                        Patent (60,000 / 10)                                                                                 6,000

2010     Patent                                                                                     600,000
                        Cash                                                                                                    600,000
           
            Original cost                                                                                                      60,000
            New patent                                                                                                     600,000
            Total cost                                                                                                         660,000
            Less: Amortization for 2008                                                                                  6,000
            Balance – January 1, 2009                                                                               654,000

            Amortization of patent (654,000 / 15)                           43,600
                        Patent                                                                                                   43,600
           
2011     Amortization of patent                                                             43,600
                        Patent                                                                                                   43,600

            Patent written off                                                                    566,800
                         Patent                                                                                                566,800
                                                                                                                                                            Balance – 1/1/2010                                                                                               654,000
            Less: Amortization                                                                    
                        2010                                                                               43,600
                        2011                                                                               43,600              87,200
            Unamortized cost                                                                                            566,800

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