Prepare journal entries to record the purchase of intangible assets and amortization expenses on December 31,...
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Prepare journal entries to record the purchase of intangible assets and amortization expenses on December 31, 2019 (where necessary) for each of the following independent questions. 1- On January 1, Hector, Inc., dominates the snack-food industry with its Tasty-Chip brand. Assume that Hector, Inc., purchased Crunchy Snacks, Inc., for $10.8 million cash. The market value of Concord Snacks' assets is $18 million, and Concord Snacks has liabilities of $12 million. 2- The company developed a new product by spending $800,000 on research and development and $80,000 on an advertising company to advertise the new product. On April 30, the company applied for a patent to protect the unique product idea. The application cost is $40,000. It also paid registration fees of $12,000 to settle some legal issues related to the patent. The company needs to pay a permit of $500 to the government at the beginning of each year. The useful life is equal to the patent legal life. 3- On September 1, a company purchased a franchise to operate Starbucks for $1,500,000. The company also paid a training cost for the employee of $50,000, the purchase of a building to use as the restaurant of $950,000; purchase equipment of $300,000, renovation cost for the building of $50,000; franchise registration cost of $20,000 and annual permit of $5,000. The franchise agreement is for indefinite life. 4- On May 1, a company purchased copyright to produce new music from Sony Music worth $2,000,000. The company also paid $300,000 for legal fees. The copyright is for ten years. Prepare journal entries to record the purchase of intangible assets and amortization expenses on December 31, 2019 (where necessary) for each of the following independent questions. 1- On January 1, Hector, Inc., dominates the snack-food industry with its Tasty-Chip brand. Assume that Hector, Inc., purchased Crunchy Snacks, Inc., for $10.8 million cash. The market value of Concord Snacks' assets is $18 million, and Concord Snacks has liabilities of $12 million. 2- The company developed a new product by spending $800,000 on research and development and $80,000 on an advertising company to advertise the new product. On April 30, the company applied for a patent to protect the unique product idea. The application cost is $40,000. It also paid registration fees of $12,000 to settle some legal issues related to the patent. The company needs to pay a permit of $500 to the government at the beginning of each year. The useful life is equal to the patent legal life. 3- On September 1, a company purchased a franchise to operate Starbucks for $1,500,000. The company also paid a training cost for the employee of $50,000, the purchase of a building to use as the restaurant of $950,000; purchase equipment of $300,000, renovation cost for the building of $50,000; franchise registration cost of $20,000 and annual permit of $5,000. The franchise agreement is for indefinite life. 4- On May 1, a company purchased copyright to produce new music from Sony Music worth $2,000,000. The company also paid $300,000 for legal fees. The copyright is for ten years.
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1 Journal entries for the purchase of Crunchy Snacks Inc by Hector Inc a To record the acquisition of Crunchy Snacks Inc Date December 31 2019 Account ... View the full answer
Related Book For
Intermediate Accounting Volume 1
ISBN: 978-1119496496
12th Canadian edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
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