E12-6 (Recording and Amortization of Intangibles) Rolanda Marshall Company, organized in 2007, has set up a single account for all intangible assets. The following summary discloses the debit entries that been recorded during 2008.
1/2/08 Purchased patent (8 yr life) $350,000
4/1/08 Purchased goodwill (indefinite life) $360,000
7/1/08 Purchased franchise with 10 yr life; expires 7/1/18 $450,000
8/1/08 Payment of copyright (5 yr life) $156,00
9/1/08 Research and development costs $215,000
Total: $1,531,000
Instructions:
Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types pf intangibles. Make the entries ad of 12/31/08 recording any necessary amortization and reflecting all balances accurately as of that date. (Use the straight line amortization)
Click here for the solution: Rolanda Marshall Company, organized in 2007, has set up a single account for all intangible assets
Showing posts with label organized. Show all posts
Showing posts with label organized. Show all posts
Wednesday, November 11, 2015
Friday, September 25, 2015
The vice president of operations of Six Layer Computers Inc. is evaluating the performance of two divisions organized as investment centers
PR 24-5B The vice president of operations of Six Layer Computers Inc. is
evaluating the performance of two divisions organized as investment
centers. Invested assets and condensed income statement data for the
past year for each division are as follows:
Network Equipment Division Personal Computing Division
Sales $1,400,000 $1,120,000
Cost of goods sold 845,000 690,000
Operating expenses 345,000 206,000
Invested assets 1,000,000 1,400,000
1. Prepare condensed divisional income statements for the year ended December 31, 2010, assuming that there were no service department charges. Enter all amounts as positive numbers.
2. Using the DuPont formula for rate of return on investment, determine the profit margin, investment turnover, and rate of return on investment for each division. Round investment turnover to one decimal place. Do not enter in the percent sign.
3. If management's minimum acceptable rate of return is 14%, determine the residual income for each division. If required, use the minus sign to indicate a negative.
4. Discuss the evaluation of the two divisions, using the performance measures determined in parts (1), (2), and (3). The input in the box below will not be graded, but may be reviewed and considered by your instructor.
Check: 2. Network Equipment Division ROI, 21%
Click here for the solution: The vice president of operations of Six Layer Computers Inc. is evaluating the performance of two divisions organized as investment centers
Network Equipment Division Personal Computing Division
Sales $1,400,000 $1,120,000
Cost of goods sold 845,000 690,000
Operating expenses 345,000 206,000
Invested assets 1,000,000 1,400,000
1. Prepare condensed divisional income statements for the year ended December 31, 2010, assuming that there were no service department charges. Enter all amounts as positive numbers.
2. Using the DuPont formula for rate of return on investment, determine the profit margin, investment turnover, and rate of return on investment for each division. Round investment turnover to one decimal place. Do not enter in the percent sign.
3. If management's minimum acceptable rate of return is 14%, determine the residual income for each division. If required, use the minus sign to indicate a negative.
4. Discuss the evaluation of the two divisions, using the performance measures determined in parts (1), (2), and (3). The input in the box below will not be graded, but may be reviewed and considered by your instructor.
Check: 2. Network Equipment Division ROI, 21%
Click here for the solution: The vice president of operations of Six Layer Computers Inc. is evaluating the performance of two divisions organized as investment centers
Tuesday, September 15, 2015
After securing lease commitments from several major stores, Auer Shopping Center, Inc was organized and built a shopping center in a growing suburb
After securing lease commitments from several major stores, Auer
Shopping Center, Inc was organized and built a shopping center in a
growing suburb. The shopping center would had opened on scheduled
January 1, 2020 if it had not been struck by a severe tornado in
December. Instead, it opened for business on October 1, 2010. All of the
additional construction costs were incurred as a result of the tornado
were covered by insurance.
In July 2009, in anticipation of the scheduled January opening a permanent staff had been hired to promote the shopping center, obtain tenants for the uncommitted space and manager the property. A summary of some of the costs incurred in 2009 and the firs nine months of 2010 follows:
2009 January 1, 2010 to September 30, 2010
Interest on Mortgage Bonds 720,000 540,000
Cost of obtaining tenants 300,000 360,000
Promotional Advertising 540,000 557,000
The promotional advertising campaign was designed to familiarize shoppers the center. Had it been known in time that the center would not open until October 2010, the 2009 expenditure would not had been made. The advertising had to be repeated in 2010 .
All of the tenants who had leased space in the shopping center at the time of the tornado had accepted the October occupancy date on condition the rental charge for the first 9 months of 2010 was cancelled.
Instructions:
Explain how each of the costs for 2009 and the first 9 months of 2010 should be treated in the accounts of the shopping center corporation. Give reasons for each treatment?
Click here for the solution: After securing lease commitments from several major stores, Auer Shopping Center, Inc was organized and built a shopping center in a growing suburb
In July 2009, in anticipation of the scheduled January opening a permanent staff had been hired to promote the shopping center, obtain tenants for the uncommitted space and manager the property. A summary of some of the costs incurred in 2009 and the firs nine months of 2010 follows:
2009 January 1, 2010 to September 30, 2010
Interest on Mortgage Bonds 720,000 540,000
Cost of obtaining tenants 300,000 360,000
Promotional Advertising 540,000 557,000
The promotional advertising campaign was designed to familiarize shoppers the center. Had it been known in time that the center would not open until October 2010, the 2009 expenditure would not had been made. The advertising had to be repeated in 2010 .
All of the tenants who had leased space in the shopping center at the time of the tornado had accepted the October occupancy date on condition the rental charge for the first 9 months of 2010 was cancelled.
Instructions:
Explain how each of the costs for 2009 and the first 9 months of 2010 should be treated in the accounts of the shopping center corporation. Give reasons for each treatment?
Click here for the solution: After securing lease commitments from several major stores, Auer Shopping Center, Inc was organized and built a shopping center in a growing suburb
Sunday, September 13, 2015
The following is a summary of all relevant transactions of Vicario Corporation since it was organized in 2010
The following is a summary of all relevant transactions of Vicario Corporation since it was organized in 2010.
In 2010, 15,000 shares were authorized and 7,000 shares of common stock ($50 par value) were is- sued at a price of $57. In 2011, 1,000 shares were issued as a stock dividend when the stock was selling for $60. Three hundred shares of common stock were bought in 2012 at a cost of $64 per share. These 300 shares are still in the company treasury.
In 2011, 10,000 preferred shares were authorized and the company issued 5,000 of them ($100 par value) at $113. Some of the preferred stock was reacquired by the company and later reissued for $4,700 more than it cost the company.
The corporation has earned a total of $610,000 in net income after income taxes and paid out a total of $312,600 in cash dividends since incorporation.
Instructions
Prepare the stockholders equity section of the balance sheet in proper form for Vicario Corporation as of December 31, 2012. Account for treasury stock using the cost method.
Click here for the solution: The following is a summary of all relevant transactions of Vicario Corporation since it was organized in 2010
In 2010, 15,000 shares were authorized and 7,000 shares of common stock ($50 par value) were is- sued at a price of $57. In 2011, 1,000 shares were issued as a stock dividend when the stock was selling for $60. Three hundred shares of common stock were bought in 2012 at a cost of $64 per share. These 300 shares are still in the company treasury.
In 2011, 10,000 preferred shares were authorized and the company issued 5,000 of them ($100 par value) at $113. Some of the preferred stock was reacquired by the company and later reissued for $4,700 more than it cost the company.
The corporation has earned a total of $610,000 in net income after income taxes and paid out a total of $312,600 in cash dividends since incorporation.
Instructions
Prepare the stockholders equity section of the balance sheet in proper form for Vicario Corporation as of December 31, 2012. Account for treasury stock using the cost method.
Click here for the solution: The following is a summary of all relevant transactions of Vicario Corporation since it was organized in 2010
Tuesday, September 8, 2015
A U.S. manufacturer wants to conduct business through a foreign subsidiary organized in a low tax jurisdiction
A U.S. manufacturer wants to conduct business through a foreign
subsidiary organized in a low tax jurisdiction. How might it do so
without being currently taxed on the subsidiary’s foreign earnings?
Click here for the solution: A U.S. manufacturer wants to conduct business through a foreign subsidiary organized in a low tax jurisdiction
Click here for the solution: A U.S. manufacturer wants to conduct business through a foreign subsidiary organized in a low tax jurisdiction
Tucson, a U.S. corporation organized in Year 1, reports the following items for a three-year period
C:16-41 Foreign Tax Credit Limitation. Tucson, a U.S. corporation
organized in Year 1, reports the following items for a three-year
period.
Foreign tax accrual $ 100,000 $ 120,000 $ 180,000
Foreign source taxable income 400,000 300,000 500,000
Worldwide taxable income 1,000,000 1,000,000 1,000,000
The foreign source and worldwide taxable income items are determined under U.S. law.
a. What is Tucson’s foreign tax credit limitation for each of the three years (assume a 34% U.S. corporate tax rate and that income from all foreign activities fall into a single basket)?
b. How are Tucson’s excess foreign tax credits (if any) treated? Do any carryovers remain after Year 3?
c. How would your answers to Parts a and b change if the IRS determines that $100,000 of expenses allocable to U.S.-source income should have been allocable to foreign source income?
d. What measures should Tucson consider if it expects its current excess foreign tax credit position to persist in the long-run?
Click here for the solution: Tucson, a U.S. corporation organized in Year 1, reports the following items for a three-year period
Foreign tax accrual $ 100,000 $ 120,000 $ 180,000
Foreign source taxable income 400,000 300,000 500,000
Worldwide taxable income 1,000,000 1,000,000 1,000,000
The foreign source and worldwide taxable income items are determined under U.S. law.
a. What is Tucson’s foreign tax credit limitation for each of the three years (assume a 34% U.S. corporate tax rate and that income from all foreign activities fall into a single basket)?
b. How are Tucson’s excess foreign tax credits (if any) treated? Do any carryovers remain after Year 3?
c. How would your answers to Parts a and b change if the IRS determines that $100,000 of expenses allocable to U.S.-source income should have been allocable to foreign source income?
d. What measures should Tucson consider if it expects its current excess foreign tax credit position to persist in the long-run?
Click here for the solution: Tucson, a U.S. corporation organized in Year 1, reports the following items for a three-year period
Sunday, August 23, 2015
Lincoln-Priest, Inc., was organized in 2011
P12-30A Issuing stock and preparing the stockholders' equity section of the balance sheet
Lincoln-Priest, Inc., was organized in 2011. At December 31, 2011, the Lincoln- Priest balance sheet reported the following stockholders' equity:
LINCOLN-PRIEST, INC.
Stockholders' Equity
December 31,2011
Paid-in Capital:
Preferred stock, 7%, $40 par, 110,000 shares authorized, none issued $0
Common stock, $1 par, 520,000 shares authorized, 61,000 shares issued and outstanding
………………………………………………………………………. $61,000
Paid-in capital in excess of par—common $41,000
Total paid-in capital $102,000
Retained earnings $29,000
Total stockholders' equity………………………………. $131,000
Requirements
1. During 2012, the company completed the following transactions. Journalize each transaction. Explanations are not required.
a. Issued for cash 1,300 shares of preferred stock at par value.
b. Issued for cash 2,400 shares of common stock at a price of $5 per share.
c. Net income for the year was $74,000, and the company declared no dividends. Make the closing entry for net income.
2. Prepare the stockholders' equity section of the Lincoln-Priest December 31, 2012.
Click here for the solution: Lincoln-Priest, Inc., was organized in 2011
Lincoln-Priest, Inc., was organized in 2011. At December 31, 2011, the Lincoln- Priest balance sheet reported the following stockholders' equity:
LINCOLN-PRIEST, INC.
Stockholders' Equity
December 31,2011
Paid-in Capital:
Preferred stock, 7%, $40 par, 110,000 shares authorized, none issued $0
Common stock, $1 par, 520,000 shares authorized, 61,000 shares issued and outstanding
………………………………………………………………………. $61,000
Paid-in capital in excess of par—common $41,000
Total paid-in capital $102,000
Retained earnings $29,000
Total stockholders' equity………………………………. $131,000
Requirements
1. During 2012, the company completed the following transactions. Journalize each transaction. Explanations are not required.
a. Issued for cash 1,300 shares of preferred stock at par value.
b. Issued for cash 2,400 shares of common stock at a price of $5 per share.
c. Net income for the year was $74,000, and the company declared no dividends. Make the closing entry for net income.
2. Prepare the stockholders' equity section of the Lincoln-Priest December 31, 2012.
Click here for the solution: Lincoln-Priest, Inc., was organized in 2011
Beech Corporation, an accrual basis taxpayer, was organized and began business on July 1, 2010
Beech Corporation, an accrual basis taxpayer, was organized and began business on July 1, 2010. During 2010, the corporation incurred the following expenses:
State fees for incorporation $ 500
Legal and accounting fees incident to organization 1,800
Expenses for the sale of stock 2,100
Organizational meeting expenses 750
Assuming that Beech Corporation does not elect to expense but chooses to amortize organizational expenditures over 15 years, calculate the corporation's deduction for its calendar tax year 2010.
Click here for the solution: Beech Corporation, an accrual basis taxpayer, was organized and began business on July 1, 2010
State fees for incorporation $ 500
Legal and accounting fees incident to organization 1,800
Expenses for the sale of stock 2,100
Organizational meeting expenses 750
Assuming that Beech Corporation does not elect to expense but chooses to amortize organizational expenditures over 15 years, calculate the corporation's deduction for its calendar tax year 2010.
Click here for the solution: Beech Corporation, an accrual basis taxpayer, was organized and began business on July 1, 2010
Tuesday, August 4, 2015
Sandy White is a realtor
P1-39B Corporate attributes, applying the entity concept, and preparing financial statements
Sandy White is a realtor. She organized her business as a corporation, Sandy White, Realtor, P.C. (Professional Corporation), by investing $27,000 cash. The business issued common stock to her. Consider the following facts at May 31, 2012:
a. The business owes $62,000 on a note payable for land that the business acquired for a total price of $80,000.
b. The business spent $26,000 for a Minko Banker real estate franchise, which entitles the business to represent itself as a Minko Banker office. This franchise is a business asset.
c. White owes $70,000 on a personal mortgage for her personal residence, which she acquired in 2012 for a total price of $130,000.
d. White has $4,000 in her personal bank account, and the business has $13,000 in its bank account.
e. White owes $3,000 on a personal charge account with Chico’s.
f. The office acquired business furniture for $20,000 on May 25. Of this amount, the business owes $5,000 on account at May 31.
g. Office supplies on hand at the real estate office total $1,100.
Requirements
1. White was concerned about liability exposure. Which corporate feature limits White’s personal liability?
2. Prepare the balance sheet of the real estate business of Sandy White, Realtor, P.C., at May 31, 2012.
3. Identify the personal items that would not be reported on the business records.
Click here for the solution: Sandy White is a realtor
Sandy White is a realtor. She organized her business as a corporation, Sandy White, Realtor, P.C. (Professional Corporation), by investing $27,000 cash. The business issued common stock to her. Consider the following facts at May 31, 2012:
a. The business owes $62,000 on a note payable for land that the business acquired for a total price of $80,000.
b. The business spent $26,000 for a Minko Banker real estate franchise, which entitles the business to represent itself as a Minko Banker office. This franchise is a business asset.
c. White owes $70,000 on a personal mortgage for her personal residence, which she acquired in 2012 for a total price of $130,000.
d. White has $4,000 in her personal bank account, and the business has $13,000 in its bank account.
e. White owes $3,000 on a personal charge account with Chico’s.
f. The office acquired business furniture for $20,000 on May 25. Of this amount, the business owes $5,000 on account at May 31.
g. Office supplies on hand at the real estate office total $1,100.
Requirements
1. White was concerned about liability exposure. Which corporate feature limits White’s personal liability?
2. Prepare the balance sheet of the real estate business of Sandy White, Realtor, P.C., at May 31, 2012.
3. Identify the personal items that would not be reported on the business records.
Click here for the solution: Sandy White is a realtor
Saturday, July 11, 2015
Anderson Corporation was organized early in 2000
Anderson Corporation was organized early in 2000. The articles of incorporation authorize 30,000 shares of $100 par value, 10% cumulative preferred stock and 600,000 shares of $5 par value common stock. The following transactions affecting stockholders’ equity were completed during the first year:
1. Issued 50 shares of preferred stock at par value as payment for legal services.
2. Issued 4,000 shares of common stock at $20 per share and 800 shares of preferred stock at par.
3. Exchanged 10,000 shares of common stock for land with an appraised value of $120,000 and a building with an appraised value of $90,000
4. Declared the required cash dividend on preferred stock and a $2 per share dividend on common stock.
5. Closed the $200,000 credit balance in the Income Summary Account.
Required
a. Prepare journal entries to record these transactions.
b. Prepare the stockholders’ equity section of the balance sheet.
Click here for the solution: Anderson Corporation was organized early in 2000
1. Issued 50 shares of preferred stock at par value as payment for legal services.
2. Issued 4,000 shares of common stock at $20 per share and 800 shares of preferred stock at par.
3. Exchanged 10,000 shares of common stock for land with an appraised value of $120,000 and a building with an appraised value of $90,000
4. Declared the required cash dividend on preferred stock and a $2 per share dividend on common stock.
5. Closed the $200,000 credit balance in the Income Summary Account.
Required
a. Prepare journal entries to record these transactions.
b. Prepare the stockholders’ equity section of the balance sheet.
Click here for the solution: Anderson Corporation was organized early in 2000
Monday, July 6, 2015
Edward Baird Company is a diversified investment company with three operating divisions organized as investment centers
Edward Baird Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 2012, are as follows:
Mutual Fund Division Electronic Brokerage Division Investment Banking Division
Fee revenue $3,450,000 $2,800,000 $3,800,000
Operating expenses 2,415,000 2,632,000 2,850,000
Invested Assets 5,750,000 800,000 4,750,000
The management of Edward Baird Company is evaluating each division as a basis for planning a future expansion of operations.
Required:
1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges.
2. Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division. If required, round your final answer to one decimal place
3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion, based on parts (1) and (2)? Explain.
Click here for the solution: Edward Baird Company is a diversified investment company with three operating divisions organized as investment centers
Mutual Fund Division Electronic Brokerage Division Investment Banking Division
Fee revenue $3,450,000 $2,800,000 $3,800,000
Operating expenses 2,415,000 2,632,000 2,850,000
Invested Assets 5,750,000 800,000 4,750,000
The management of Edward Baird Company is evaluating each division as a basis for planning a future expansion of operations.
Required:
1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges.
2. Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division. If required, round your final answer to one decimal place
3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion, based on parts (1) and (2)? Explain.
Click here for the solution: Edward Baird Company is a diversified investment company with three operating divisions organized as investment centers
Thursday, July 2, 2015
On October 1, Keisha King organized Real Answers, a new consulting firm
On October 1, Keisha King organized Real Answers, a new consulting
firm. On October 31, the company’s records show the following items and
amounts. Use this information to prepare an October income statement for
the business.
Cash . . . . . . . . . . . . . . . . . . $11,500 Cash dividends . . . . . . . . . . . . . . $ 2,000
Accounts receivable . . . . . . . 12,000 Consulting fees earned . . . . . . . . 14,000
Office supplies . . . . . . . . . . . 24,437 Rent expense . . . . . . . . . . . . . . . 2,520
Land . . . . . . . . . . . . . . . . . . . 46,000 Salaries expense . . . . . . . . . . . . . 5,600
Office equipment . . . . . . . . . 18,000 Telephone expense . . . . . . . . . . . 760
Accounts payable . . . . . . . . . 25,037 Miscellaneous expenses . . . . . . . 580
Common stock . . . . . . . . . . . 84,360
Check: Net income, $4,540Click here for the solution: On October 1, Keisha King organized Real Answers, a new consulting firm
Saturday, June 27, 2015
Diaz Company was organized on January 1
Problem 10-1A (P10-1A) Diaz Company was organized on January 1. During
the first year of operations, the following plant asset expenditures and
receipts were recorded in random order:
1. Cost of filling and grading the land $4,000
2. Full payment to building contractor $700,000
3. Real estate taxes on land paid for the current year
AND SO ON
9. Cost of demolishing building to make land suitable for construction of new building $15,000
Total $930,000
Instructions:
Analyze the foregoing transactions using the following column headings. Insert the number of each transaction in the Item space, and insert the amounts in the appropriate columns. For amounts entered in the Other Accounts column, also indicate the account titles.
Click here for the solution: Diaz Company was organized on January 1
1. Cost of filling and grading the land $4,000
2. Full payment to building contractor $700,000
3. Real estate taxes on land paid for the current year
AND SO ON
9. Cost of demolishing building to make land suitable for construction of new building $15,000
Total $930,000
Instructions:
Analyze the foregoing transactions using the following column headings. Insert the number of each transaction in the Item space, and insert the amounts in the appropriate columns. For amounts entered in the Other Accounts column, also indicate the account titles.
Click here for the solution: Diaz Company was organized on January 1
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