Information concerning Sandro Corporation’s intangible assets is as follows

P12-3 Information concerning Sandro Corporation’s intangible assets is as follows.

1. On January 1, 2010, Sandro signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $75,000. Of this amount, $15,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $15,000 each, beginning January 1, 2011. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2010, of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is $43,700. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Sandro’s revenue from the franchise for 2010 was $900,000. Sandro estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Appendix 18A to determine the proper accounting treatment for the franchise fee and payments.)

2. Sandro incurred $65,000 of experimental and development costs in its laboratory to develop a patent that was granted on January 2, 2010. Legal fees and other costs associated with registration of the patent totaled $17,600. Sandro estimates that the useful life of the patent will be 8 years.

3. A trademark was purchased from Shanghai Company for $36,000 on July 1, 2007. Expenditures for successful litigation in defense of the trademark totaling $10,200 were paid on July 1, 2010. Sandro estimates that the useful life of the trademark will be 20 years from the date of acquisition.

Instructions
(a) Prepare a schedule showing the intangible assets section of Sandro’s balance sheet at December 31, 2010. Show supporting computations in good form.

(b) Prepare a schedule showing all expenses resulting from the transactions that would appear on Sandro’s income statement for the year ended December 31, 2010. Show supporting computations in good form.


Click here for the solution: Information concerning Sandro Corporation’s intangible assets is as follows

Your professor has asked you to complete a research paper concerning the link between the auditing profession and financial reporting standard setters and regulators

Problem 1-34 Your professor has asked you to complete a research paper concerning the link between the auditing profession and financial reporting standard setters and regulators.

Required:
For each independent situation, determine which regulating or standard-setting body you should research:
(a) The entity that sets accounting standards for the government sector.
(b) The entity that decides what is required to become a licensed CPA and conduct work as a CPA.
(c) The entity that sets standards for audits of publicly traded companies.
(d) The entity that sets financial reporting standards in the U.S.
(e) The entity that prepares and administers the Uniform CPA Exam.
(f) The entity that has ultimate authority over public company reports as well as accounting and reporting standards.


Click here for the solution: Your professor has asked you to complete a research paper concerning the link between the auditing profession and financial reporting standard setters and regulators

Which of the following is correct concerning reactions to INCREASES in activity

MULTIPLE CHOICE

1. Which of the following is correct concerning reactions to INCREASES in activity?
a. Total Variable Cost
b. Variable Cost Per Unit (Points : 2)

2. A mattress manufacturer has provided the following cost data. The cost of fabric, foam, springs, and lumber is $68,000. The cost of indirect materials is $21,000. Labor cost of assembly workers is $52,000 and for production supervisors is $14,000. How much indirect cost is included in the above costs? (Points : 2)

3. How much sunk cost is represented in the following list?
Annual operating cost $80,000
Fixed operating costs other than depreciation $14,000
Resale value, if sold now $25,000
Original cost of current machine $68,000 (Points : 2)

4. Rotonga Manufacturing Company leases a vehicle that it uses to deliver its finished products to customers. Which of the following terms could be used to correctly describe the monthly lease payments made on the delivery vehicle?
a. Direct Cost
b. Fixed Cost (Points : 2)

5. A manufacturing plant produces two product lines: football equipment and hockey equipment. An indirect cost for the hockey equipment line is the: (Points : 2)

6. At a sales volume of 20,000 units, Choice Corporation's sales commmissions (a cost that is variable with respect to sales volume) total $132,000.
To the nearest whole cent, what should be the average sales commission per unit at a sales volume of 18,500 units? (Assume that this sales volume is within the relevant range.) (Points : 2)

7. The potential benefit that is given up when one alternative is selected over another is called: (Points : 2)

8. An example of a fixed cost that would be considered a direct cost is: (Points : 2)

9. An example of a cost object is: (Points : 2)

10. When the level of activity decreases within the relevant range, the fixed cost per unit will: (Points : 2)

11. Haala Inc. is a merchandising company. Last month the company's cost of goods sold was $68,000. The company's beginning merchandise inventory was $11,000 and its ending merchandise inventory was $17,000. What was the total amount of the company's merchandise purchases for the month? (Points : 2)

12. A sunk cost is: (Points : 2)

13. Mark is an engineer who has designed a telecommunications device. He is convinced that there is a big potential market for the device. Accordingly, he has decided to quit his present job and start a company to manufacture and market the device.
Mark purchased a machine two years ago to make experimental boards. The machine will be used to manufacture the new board. The cost of this machine is: (Points : 2)

14. Cost distortion is common in conventional costing systems because: (Points : 2)

15. At a sales volume of 38,000 units, Tirri Corporation's property taxes (a cost that is fixed with respect to sales volume) total $733,400.
To the nearest whole dollar, what should be the total property taxes at a sales volume of 37,200 units? (Assume that this sales volume is within the relevant range.) (Points : 2)

16. Indirect manufacturing costs: (Points : 2)

17. A manufacturing plant produces two product lines: football equipment and hockey equipment. Direct costs for the football equipment line are the: (Points : 2)

18. At a sales volume of 38,000 units, Tirri Corporation's property taxes (a cost that is fixed with respect to sales volume) total $733,400.
To the nearest whole center, what should be the average property tax per unit at a sales volume of 37,300 units? (Assume that this sales volume is within the relevant range.) (Points : 2)

19. A recent college graduate has the choice of buying a new auto for $20,000 or to invest the money for four years with a 12% expected rate of return. If the graduate decides to purchase the auto, the BEST estimate of the opportunity cost of that decision is: (Points : 2)

20. The fixed portion of the cost of electricity for a manufacturing plant is:
a. Period cost
b. Product cost (Points : 2)


Click here for the solution: Which of the following is correct concerning reactions to INCREASES in activity

Bruno Company accumulates the following data concerning a mixed cost, using miles as the activity level

BE5-4 Bruno Company accumulates the following data concerning a mixed cost, using miles as the activity level

Miles Driven Total Cost Miles Driven Total Cost
January 8,000 $14,150 March 8,500 $15,000
February 7,500 13,500 April 8,200 14,490

Compute the variable and the fixed cost element using the high-low method

Click here for the solution: Bruno Company accumulates the following data concerning a mixed cost, using miles as the activity level