Concord Corporation, a private entity reporting under ASPE, was incorporated on January 3, 2019. The corporations financial statements for its first year of operations were not examined by a public accountant. You have been engaged to audit the financial statements for the year ended December 31, 2020, and your audit is almost complete. The corporations trial balance is as follows:

CONCORD CORPORATION Trial Balance December 31, 2020
		Debit		Credit
Cash		$ 56,000
Accounts receivable		87,000
Allowance for doubtful accounts				$ 1,800
Inventory		59,200
Machinery		81,000
Equipment		38,000
Accumulated depreciation				27,200
Intangible assetspatents		123,700
Leasehold improvements		32,900
Prepaid expenses		13,000
Goodwill		30,000
Intangible assetslicensing agreement No. 1		52,500
Intangible assetslicensing agreement No. 2		58,000
Accounts payable				93,000
Unearned revenue				17,280
Common shares				300,000
Retained earnings, January 1, 2020				153,520
Sales				725,000
Cost of goods sold		475,000
Selling expenses		184,000
Interest expense		27,500
Total		$1,317,800		$1,317,800

The following information is for accounts that may still need adjustment:

1.

Patents for Concords manufacturing process were acquired on January 2, 2020, at a cost of $85,000. An additional $33,000 was spent in July 2020 and $5,700 in December 2020 to improve machinery covered by the patents and was charged to the Intangible AssetsPatents account. Depreciation on fixed assets was properly recorded for 2020 in accordance with Concords practice, which is to take a full year of depreciation for property on hand at June 30. No other depreciation or amortization was recorded. Concord uses the straight-line method for all amortization and amortizes its patents over their legal life, which was 17 years when the patent was granted. Accumulate all amortization expense in one income statement account.

2.

At December 31, 2020, management determined that the undiscounted future net cash flows that are expected from the use of the patent would be $82,000, the value in use was $77,000, the resale value of the patent was approximately $57,000, and disposal costs would be $5,000.

3.

On January 3, 2019, Concord purchased licensing agreement no. 1, which management believed had an unlimited useful life. Licences similar to this are frequently bought and sold. Concord could only clearly identify cash flows from agreement no. 1 for 15 years. After the 15 years, further cash flows are still possible, but are uncertain. The balance in the Licences account includes the agreements purchase price of $49,500 and expenses of $3,000 related to the acquisition. On January 1, 2020, Concord purchased licensing agreement no. 2, which has a life expectancy of five years. The balance in the Licences account includes its $54,000 purchase price and $8,000 in acquisition expenses, but it has been reduced by a credit of $4,000 for the advance collection of 2021 revenue from the agreement. In late December 2019, an explosion caused a permanent 60% reduction in the expected revenue-producing value of licensing agreement no. 1. In January 2021, a flood caused additional damage that rendered the agreement worthless.

4.

The balance in the Goodwill account results from legal expenses of $30,000 that were incurred for Concords incorporation on January 3, 2019. Management assumes that the $30,000 cost will benefit the entire life of the organization, and believes that these costs should be amortized over a limited life of 30 years. No entry has been made yet.

5.

The Leasehold Improvements account includes the following:

(i)		There is a $13,000 cost of improvements that Concord made to premises that it leases as a tenant. The improvements were made in January 2019 and have a useful life of 12 years.
(ii)		Movable assembly-line equipment costing $13,000 was installed in the leased premises in December 2020.
(iii)		Real estate taxes of $6,900 were paid by Concord in 2020, but they should have been paid by the landlord under the terms of the lease agreement.

Concord paid its rent in full during 2020. A 10-year non-renewable lease was signed on January 3, 2019, for the leased building that Concord uses in manufacturing operations. No amortization or depreciation has been recorded on any amounts related to the lease or improvements.

6.

Included in selling expenses are the following costs incurred to develop a new product. Concord hopes to establish the technical, financial, and commercial viability of this project in fiscal 2021.

Salaries of two employees who spend approximately 50% of their time on research and development initiatives (this amount represents their full salary)		$110,000
Materials consumed		35,000

(a)

Complete the eight-column work sheet to adjust the accounts that require adjustment. (Round answers to 0 decimal places, e.g. 5,275.)

Complete the eight-column work sheet to adjust the accounts that require adjustment. (Round answers to 0 decimal places, e.g. 5,275.)

Trial Balance

Adjustments

Income Statement

SFP

General Ledger Account

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Cash

$

$

$

$

$

$

$

$

Accounts Receivable

Allowance for Doubtful Accounts

Inventory

Machinery

Equipment

Accumulated Depreciation

Intangible Assets - Patents

Leasehold Improvements

Prepaid Expenses

Goodwill

Intangible Assets - Licenses

Accounts Payable

Unearned Revenue

Common Shares

Retained earnings, January 1, 2020

Sales

Cost of Goods Sold

Selling Expenses

Interest Expense

Totals

$

$

Research and Development Expense

Acc. Amort. - Patents

Acc. Imp. Losses- Patents

Acc. Dep. - Leasehold Improvements

Acc. Amort. Licenses

Loss on Impairment

Acc. Imp. Losses. - Licences

Depreciation Expense

Amortization Expense

$

$

$

$

$

$

Net loss for 2020

Totals