Zurich Manufacturing Company acquired three patents in August 2019. The patents have different useful life as indicated in the following schedule: Remaining Useful Life 8 years 3 years 10 years Cost Patent A P125,000 Patent B 72,000 Patent C 256,250 Patent C is believed to be uniquely useful as long as the company retains the right to use it. On June 30, 2020, the company unsuccessfully attempted to defend Its right to Patent B. Legal fees of P17,500 were incurred in this action. The company's policy is to take full year amortization in the year of acquisition and no amortization in the year of derecognition using straight-line method. The company reports on a calendar-year basis. How much is the amortization of the patent for the year 2020?
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How much is the loss taken to profit or loss during 2020 relating to the derecognition of Patent?
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- In examining Samson Manufacturing Companys books, you find on the December 31, 2019, balance sheet the item, Costs of patents, 308,440. Referring to the ledger accounts, you note the following items regarding one patent acquired in 2016; There are no credits in the account, and the company has not recorded any amortization for any of the patents. There are three other parents issued in 2013, 2015, and 2016; all were developed by the staff of Samson. The patented articles are presently very marketable, but are estimated to be in demand only for the next few years. Required: Discuss the accounting issues related to the items included in the Patent account.Presented below is selected information for Sheridan Company. Answer the questions asked about each of the factual situations. (Do not leave any answer field blank. Enter O for amounts.) 1. Sheridan purchased a patent from Vania Co. for $1,160,000 on January 1, 2018. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2028. During 2020, Sheridan determined that the economic benefits of the patent would not last longer than 6 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2020? The amount to be reported $ 2. Sheridan bought a franchise from Alexander Co. on January 1, 2019, for $330,000. The carrying amount of the franchise on Alexander's books on January 1, 2019, was $330,000. The franchise agreement had an estimated useful life of 30 years. Because Sheridan must enter a competitive bidding at the end of 2021, it is unlikely that the…At December 31, 2020, Green company had three existing patents shown below: Date Acquired February 14, 2016 January 3, 2019 July 1, 2019 Useful life 8 years 10 years 5 years Cost Patent A Patent B Patent C P 150,000 210,250 72,000 During 2021, the company had the following transactions and assessments: • Due to the emerging competition relating to the product being manufactured in Patent A, it is expected that the right will be useful only in 2021 and 2022. • Patent B is believe to be uniquely useful as long as the company retains the right to use it. • On June 1, 2021, the company unsuccessfully attempted to defend its right to Patent C. Legal fees of P15,000 was incurred in this action. The asset was immediately derecognized in the accounts. The company's policy is to take full year amortization in the year of acquisition and no amortization in the year of derecognition using straight-line method. How much is the amortization of patent for the year 2021?
- Sandhill Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $324,500 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it. (b) Your answer is correct. The project is completed in 2020, and a successful patent is obtained. The R&D costs to complete the project are $114,500. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2020 total $17,250. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Research and Development Expense 114500 Cash 114500 (To record research and…Wildhorse Corporation purchased a patent for $ 148500 on September 1, 2019. It had a useful life of 10 years. On January 1, 2021, Wildhorse spent $ 42000 to successfully defend the patent in a lawsuit. Wildhorse feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2021? O $ 35130. O $ 34140. O $ 25740. O $ 32160.On January 2, 2018, David Corporation purchased a patent for $500,000. The remaining legal life is 12 years, butthe company estimated that the patent will be useful only for eight years. In January 2020, the company incurredlegal fees of $45,000 in successfully defending a patent infringement suit. The successful defense did not changethe company’s estimate of useful life.Required:Prepare journal entries related to the patent for 2018, 2019, and 2020.
- During 2020, Smith Company filed suit against West Problem 4-31 (AICPA Adapted) During 2020, Smith Company filed suit against West Company seeking damages for patent infringement. On December 31, 2020, the legal counsel believed that it was probable that Smith Company would be successful against West Company for an estimated amount of P1,500,000. On March 31, 2021, Smith Company was awarded P1,000,000 and received full payment thereof. The financial statements were issued March 1, 2021. In Smith Company's 2020 financial statements, how should this award be reported? a. As a receivable and revenue of P1,000,000. b. As a receivable and deferred revenue of P1,000,000. c. As a disclosure of a contingent asset of P1,000,000. d. As a disclosure of a contingent asset of P1,500,000.Probst Company acquired a trademark several years ago at a cost of $60,000. Probst has never considered the trademark to be impaired. However, at the end of 2019, Probst has determined that the trademark is impaired because of a change in market conditions. It estimates that the trademark has a fair value of $40,000 at the end of 2019. Required: 1. Prepare Probst’s journal entry (if any) to record the impairment of its trademark at the end of 2019. 2. Next Level Assume Probst uses IFRS. If Probst estimates that the cost of selling the trademark is zero but the value-in-use is $45,000, prepare Probst’s journal entry to record the impairment of its trademark at the end of 2019. 3. Assume, instead, that Probst estimated that the trademark had a fair value of $70,000 at the end of 2019. How would Probst account for this if it were using (a) U.S. GAAP or (b) IFRS?On January 2, 2021, David Corporation purchased a patent for $500,000. The remaining legal life is 12 years, but the company estimated that the patent will be useful only for eight years. In January 2023, the company incurred legal fees of $45,000 in successfully defending a patent infringement suit. The successful defense did not change the company’s estimate of useful life. Required:Prepare journal entries related to the patent for 2021, 2022, and 2023. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record the purchase of the patent. Record amortization of the patent for the year 2021. Record amortization of the patent for the year 2022. Record costs of successfully defending the patent infringement suit. Record amortization of the patent for the year 2023.
- Carla Vista Corporation purchased a patent for $12750 on September 1, 2019. It had a useful life of 10 years. On January 1, 2021, Carla Vista spent $28000 to successfully defend the patent in a lawsuit. Carla Vista feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2021? $27700. $28550. $22100. $26000.On January 1, 2018, Laica Company purchased a patent from an original patentee for P2,400,000. The remaining life of the patent is 15 years but the useful life is only 12 years. On January 1, 2019, the entity paid P550,000 in successfully defending the patent in an infringement suit filed against the entity. On January 1, 2020, an entity acquired a competing patent for P1,500,000. The competing patent has a remaining life of 15 years but it is not used because it was intended to protect the original patent. Assume that the company is an SME. What is the carrying amount of the patent on December 31, 2020?Provide the necessary accounting entries: A patent right is acquired July 1,2021, for P250,000; while it has a legal life of 15 years, due to rapidly changing technology, management estimates a useful life of only five years. "Netting" method, straight-line amortization will be used. At January 1, 2022, management is uncertain that the process can actually be made economically feasible, and decides to write down the patent to an estimated market value of P75,000. Amortization will be taken over three years from that point. On January 1, 2024, having perfected the related production process, the asset is now appraised at a depreciated replacement cost of P300,000. Furthermore, the estimated useful life is now believed to be six more years.