Question 16 Day Company purchased a patent on January 1, 2012 for $600,000. The
ID: 2511245 • Letter: Q
Question
Question 16
Day Company purchased a patent on January 1, 2012 for $600,000. The patent had a remaining useful life of 10 years at that date. In January of 2013, Day successfully defends the patent at a cost of $270,000, extending the patent's life to 12/31/24. What amount of amortization expense would Kerr record in 2013?
Question 16 options:
$60,000
$67,500
$72,500
$90,000
Question 17
Riley Co. incurred the following costs during 2013:
Significant modification to the formulation of a chemical product
$160,000
Trouble-shooting in connection with breakdowns during commercial production
$150,000
Cost of exploration of new formulas
$200,000
Seasonal or other periodic design changes to existing products
$185,000
Laboratory research aimed at discovery of new technology
$275,000
In its income statement for the year ended December 31, 2013, Riley should report research and development expense of ____________.
Question 17 options:
$635,000
$785,000
$820,000
$970,000
Question 18
Tripiani Inc. incurred $800,000 of capitalizable costs to develop computer software during 2012. The software will earn total revenues over its 5-year life as follows: 2012 - $500,000; 2013 - $600,000; 2014 - $600,000; 2015 - $200,000; and 2016 - $100,000. What amount of the computer software costs should be expensed in 2012?
Question 18 options:
$200,000
$160,000
$180,000
$266,667
Question 19
Tripiani Inc. incurred $900,000 of capitalizable costs to develop computer software during 2012. The software will be used internally over its 5-year life. What amount of the computer software costs should be expensed in 2012?
Question 19 options:
$900,000
$180,000
$202,500
$300,000
Question 20
In January, 2008, Findley Corporation purchased a patent for a new consumer product for $960,000. At the time of purchase, the patent was valid for fifteen years. Due to the competitive nature of the product, however, the patent was estimated to have a useful life of only ten years. During 2013 the product was permanently removed from the market under governmental order because of a potential health hazard present in the product. What amount should Findley charge to expense during 2013, assuming amortization is recorded at the end of each year?
Question 20 options:
$640,000
$480,000
$96,000
$64,000
A.$60,000
B.$67,500
C.$72,500
D.$90,000
Explanation / Answer
Question 16
Answer -Cost on 1 January 2013=$540000($600000-60000 amortizatise in first year)
+ additinional cost in january 2013=$270000
useful life=12 Years(Extend upto 12/31/24
Amortaziation Expenses=Total cost/useful life
=($540000+$270000)/12
=$67500
So option B is correct.
Question 18
Ans=A)$200000
Capitalization cost=$800000
Total revenue in 5 years=$2000000
Revenuein 1St year=$500000
So computerSoftware costs to be exposed in 2012=(500000/2000000)*8000000
=$200000
Question 19
Answer-B)$180000
Total Capitalization cost=$900000
Useful Life =5 year
Cost should be exposed in1styear(2012)=$900000/5
=$180000
Question 20
Answe-B)480000
Patent was puchased in 2008 for $960000.Due to nature of competituve useful life is 10 years.Cost of the patent after 5 year=($960000/10)*5
=$480000.
Due to goverment order potentialhealth hazard in this product.Total value of the product (i.e$480000) Shoud be amortizise at the end of the year 2013.