Valix Finacc vol 1 Problem 20-9

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 20 Problem 20-9

1. Retained earnings                                                                           500,000

Patent                                                                                                             500,000

                                                                                                                                   

2. Patent                                                                                              510,000

            Retained earnings                                                                                           510,000

3. No adjustment.

4. Loss on damages                                                                            100,000

    Legal expense                                                                                   30,000

            Accrued liabilities                                                                                            130,000                        

5. Patent                                                                                                24,500

Retained earnings                                                                                             24,500

    Amortization per book (500,000 – 450,000)                                                    50,000

    Correct amortization for 2007 (510,000 / 20)                                                             25,500

    Overamortization                                                                                                      24,500

6. Amortization of patent                                                                   25,500

Patent                                                                                                               25,500