ACCT 310 ACCT310 Homework 7 Solution / Intermediate Accounting I

ACCT 310 ACCT310 Homework 7 Solution / Intermediate Accounting I

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ACCT 310 Intermediate Accounting I Homework 7 Answers  

1. Name three costs included in the capitalization of land?

2. Name three costs that should not be treated as research and development.

3. What type of intangible assets is subject to amortization?

4. What are three different methods of amortization?

5. Under GAAP, internally generated intangible assets may not be capitalized. What are the principles for accounting for internally generated intangible assets under IFRS?

III. Exercises.

1. S-Pilot Company incurred the following costs during 2016:

Design of tools, jigs, molds and dies involving new Technology	$250,000
Modification of the formulation of a process	320,000
Troubleshooting in connection with breakdowns during commercial   Production	200,000
Adaption of an existing capability to a particular customer’s need as Part of a continuing commercial activity	220,000

In its 2016 income statement, what expense should S-Pilot report for research and development?

2. Alton Inc. purchased equipment for $20,000 on January 1, 2015. The estimated useful life is 5 years and the residual at the end of the five years is $2,000. Alton uses the double-declining balance depreciation method. What will be the carrying value (book value) at December 31, 2017?

3. A Company on January 1, 2017 purchased B Company at a cost that resulted in recognition of goodwill of $300,000. During the first quarter of 2017, A Company spends an additional $120,000 on expenditures designed to maintain goodwill. In its December 31, 2017 balance sheet, what amount should A Company report as goodwill?

4. Assume a corporation has a cash surrender value of $20,000 at the beginning of the year. During the year, a premium of $100,000 is paid, and the cash surrender value at the end of the year is $32,000.