Determine cost of plant acquisitions.<\/b><\/p>\n
E9-1<\/b> The following expenditures relating to plant assets were made by Spaulding Company<\/p>\n
during the first 2 months of 2011.<\/p>\n
1. Paid $5,000 of accrued taxes at time plant site was acquired.<\/p>\n
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery<\/p>\n
was in transit.<\/p>\n
3. Paid $850 sales taxes on new delivery truck.<\/p>\n
4. Paid $17,500 for parking lots and driveways on new plant site.<\/p>\n
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.<\/p>\n
6. Paid $8,000 for installation of new factory machinery.<\/p>\n
7. Paid $900 for one-year accident insurance policy on new delivery truck.<\/p>\n
8. Paid $75 motor vehicle license fee on the new truck.<\/p>\n
Instructions<\/b><\/p>\n
(a) Explain the application of the cost principle in determining the acquisition cost of<\/p>\n
plant assets.<\/p>\n
(b) List the numbers of the foregoing transactions, and opposite each indicate the account title<\/p>\n
to which each expenditure should be debited.<\/p>\n
E9-7<\/b> Brainiac Company purchased a delivery truck for $30,000 on January 1, 2011.The truck<\/p>\n
has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated<\/p>\n
useful life of 8 years.Actual miles driven were 15,000 in 2011 and 12,000 in 2012.<\/p>\n
Instructions<\/b><\/p>\n
(a) Compute depreciation expense for 2011 and 2012 using (1) the straight-line method, (2) the<\/p>\n
units-of-activity method, and (3) the double-declining balance method.<\/p>\n
(b) Assume that Brainiac uses the straight-line method.<\/p>\n
(1) Prepare the journal entry to record 2011 depreciation.<\/p>\n
(2) Show how the truck would be reported in the December 31, 2011, balance sheet.<\/p>\n
E9-12 <\/b>The following are selected 2011 transactions of Franco Corporation.<\/p>\n
Jan. 1 Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite.<\/p>\n
May 1 Purchased for $90,000 a patent with an estimated useful life of 5 years and a legal life<\/p>\n
of 20 years.<\/p>\n
Instructions<\/b><\/p>\n
Prepare necessary adjusting entries at December 31 to record amortization required by the<\/p>\n
events above.<\/p>\n
P9-7B <\/b>The intangible assets section of Time Company at December 31, 2011, is presented below.<\/p>\n
Patent ($100,000 cost less $10,000 amortization) $ 90,000<\/p>\n
Copyright ($60,000 cost less $24,000 amortization) 36,000<\/p>\n
Total $126,000<\/p>\n
The patent was acquired in January 2011 and has a useful life of 10 years.The copyright was acquired<\/p>\n
in January 2008 and also has a useful life of 10 years.The following cash transactions may<\/p>\n
have affected intangible assets during 2012.<\/p>\n
Jan. 2 Paid $45,000 legal costs to successfully defend the patent against infringement by<\/p>\n
another company.<\/p>\n
Jan.\u2013June Developed a new product, incurring $230,000 in research and development costs.A<\/p>\n
patent was granted for the product on July 1. Its useful life is equal to its legal life.<\/p>\n
Sept. 1 Paid $125,000 to an Xgames star to appear in commercials advertising the<\/p>\n
company\u2019s products.The commercials will air in September and October.<\/p>\n
Oct. 1 Acquired a copyright for $200,000.The copyright has a useful life of 50 years.<\/p>\n
Instructions<\/b><\/p>\n
(a) Prepare journal entries to record the transactions above.<\/p>\n
(b) Prepare journal entries to record the 2012 amortization expense for intangible assets.<\/p>\n
(c) Prepare the intangible assets section of the balance sheet at December 31, 2012.<\/p>\n
(d) Prepare the note to the financials on Time\u2019s intangibles as of December 31, 2012.<\/p>\n","protected":false},"excerpt":{"rendered":"
Determine cost of plant acquisitions. E9-1 The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011. 1. Paid $5,000 of accrued taxes at time plant site was acquired. 2. Paid $200 Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-49117","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/49117","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=49117"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/49117\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=49117"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=49117"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=49117"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}