Question

PrideTalk Corp., reporting under ASPE, has provided the following information regarding its intangible assets:
1. A patent was purchased from Marvin Inc. for $1.2 million on January 1, 2013. PrideTalk estimated the patent's remaining useful life to he 10 years. The patent was carried in Marvin's accounting records at a calling amount of $1,350,000 when Marvin sold it to PrideTalk. On January 1, 2014, because of recent events in the field, PrideTalk estimates that the remaining life of this patent is only five years from January 1, 2014.
2. During 2014, a franchise was purchased from Burr Ltd. for $290,000. As part of the deal, Burr must also he paid 5% of revenue from the franchise operations. Revenue from the franchise for 2014 was $1.4 million. PrideTalk estimates the franchise's useful life to he 10 years and takes a full years amortization in the year of purchase.
3. PrideTalk incurred the following research costs in 2014:
Materials and equipment ............... $81,000
Personnel ..................... 111,000
Indirect costs ..................... 55,000
$247,000
Instructions
(a) Prepare a schedule showing the intangibles section of PrideTalk's balance sheet at December 31, 2014. Show supporting calculations in good form.
(b) Prepare a schedule showing the income statement effect for the year ended December 31, 2014, as a result of the facts above. Show supporting calculations in good form.
(c) Explain how the accounting would differ if PrideTalk is a public company.


$1.99
Sales3
Views85
Comments0
  • CreatedSeptember 18, 2015
  • Files Included
Post your question
5000