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Accounting Exercise 12-11 - Tones Industries

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Question;Exercise 12-11 (Part Level Submission)Tones Industries has the following patents on its December 31, 2013, balance sheet.PatentItemPatent APatent BPatent CInitialCost$30,600$15,000$14,400DateAcquired3/1/107/1/119/1/12Useful Life at DateAcquired17 years10 years4 yearsThe following events occurred during the year ended December 31, 2014.1.2.3.Research and development costs of $245,700 were incurred during the year.Patent D was purchased on July 1 for $36,480. This patent has a useful life of 91/2 years.As a result of reduced demands for certain products protected by Patent B, a possible impairment ofPatent Bs value may have occurred at December 31, 2014. The controller for Tones estimates theexpected future cash flows from Patent B will be as follows.Year201520162017Expected Future Cash Flows$2,0002,0002,000The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end ofthe year.)(A) Compute the total carrying amount of Tones patents on its December 31, 2013, balance sheet. (Round all answers to 0 decimal places, e.g. 8,564)Total carrying amount(B) Compute the total carrying amount of Tones' patents on its December 31, 2014, balance sheet. (Round all answers to 0 decimal places, e.g. 8,564)Total carrying amount

 

Paper#39642 | Written in 18-Jul-2015

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