Exercise 12 10 (Part Level Submission) Skysong Industries has the following patents on its December 31, 2016, balance sheet Patent Item Initial Cost Date Acquired Useful Life at Date Acquired Patent A $44,268 3 1 13 17 years Patent B $17,040 7 1 14 10 years Patent C $22,560 9 1 15 4 years The following events occurred during the year ended December 31, 2017 1 Research and development costs of $247,000 were incurred during the year 2 Patent D was purchased on July 1 for $37,848 This patent has a useful life of 9 1 2 years 3 As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent Bs value may have occurred at December 31, 2017 The controller for Skysong estimates the expected future cash flows from Patent B will be as follows Year Expected Future Cash Flows 2018 $2,200 2019 2,200 2020 2,200 The proper discount rate to be used for these flows is 8 (Assume that the cash flows occur at the end of the year ) (a) Compute the total carrying amount of Skysong patents on its December 31, 2016, balance sheet (Round answer to 0 decimal places, e g 8,564 ) Total carrying amount $ Exercise 12 12 (Part Level Submission) On July 1, 2017, Flounder Corporation purchased Young Company by paying $252,400 cash and issuing a $128,000 note payable to Steve Young At July 1, 2017, the balance sheet of Young Company was as follows Cash $51,600 Accounts payable $204,000 Accounts receivable 91,900 Stockholders equity 247,900 Inventory 110,000 $451,900 Land 41,500 Buildings (net) 74,900 Equipment (net) 70,200 Trademarks 11,800 $451,900 The recorded amounts all approximate current values except for land (fair value of $60,400), inventory (fair value of $125,100), and trademarks (fair value of $14,960) (a) Prepare the July 1 entry for Flounder Corporation to record the purchase (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 0 for the amounts ) Account Titles and Explanation Debit Credit Exercise 12 13 (Part Level Submission) Presented below is information related to copyrights owned by Sandhill Company at December 31, 2017 Cost $8,680,000 Carrying amount 4,210,000 Expected future net cash flows 3,980,000 Fair value 3,420,000 Assume that Sandhill Company will continue to use this copyright in the future As of December 31, 2017, the copyright is estimated to have a remaining useful life of 10 years (a) Prepare the journal entry to record the impairment of the asset at December 31, 2017 The company does not use accumulated amortization accounts (If no entry is required, select No Entry for the account titles and enter 0 for the amounts Credit account titles are automatically indented when amount is entered Do not indent manually ) Account Titles and Explanation Debit Credit

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Exercise 12-10 (Part Level Submission) Skysong Industries has the following patents on its December 31, 2016, balance sheet. Patent Item Initial Cost Date Acquired Useful

Exercise 12-10 (Part Level Submission)

Skysong Industries has the following patents on its December 31, 2016, balance sheet.

Patent Item	Initial Cost	Date Acquired	Useful Life at Date Acquired
Patent A	$44,268	3/1/13	17 years
Patent B	$17,040	7/1/14	10 years
Patent C	$22,560	9/1/15	4 years

The following events occurred during the year ended December 31, 2017.

1.		Research and development costs of $247,000 were incurred during the year.
2.		Patent D was purchased on July 1 for $37,848. This patent has a useful life of 9¹/₂years.
3.		As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent Bs value may have occurred at December 31, 2017. The controller for Skysong estimates the expected future cash flows from Patent B will be as follows.

Year		Expected Future Cash Flows
2018		$2,200
2019		2,200
2020		2,200

The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year.)

(a)

Compute the total carrying amount of Skysong patents on its December 31, 2016, balance sheet. (Round answer to 0 decimal places, e.g. 8,564.)

Total carrying amount

Exercise 12-12 (Part Level Submission)

On July 1, 2017, Flounder Corporation purchased Young Company by paying $252,400 cash and issuing a $128,000 note payable to Steve Young. At July 1, 2017, the balance sheet of Young Company was as follows.

Cash	$51,600	Accounts payable	$204,000
Accounts receivable	91,900	Stockholders equity	247,900
Inventory	110,000		$451,900
Land	41,500
Buildings (net)	74,900
Equipment (net)	70,200
Trademarks	11,800
	$451,900

The recorded amounts all approximate current values except for land (fair value of $60,400), inventory (fair value of $125,100), and trademarks (fair value of $14,960).

(a)

Prepare the July 1 entry for Flounder Corporation to record the purchase. (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 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

Exercise 12-13 (Part Level Submission)

Presented below is information related to copyrights owned by Sandhill Company at December 31, 2017.

Cost		$8,680,000
Carrying amount		4,210,000
Expected future net cash flows		3,980,000
Fair value		3,420,000

Assume that Sandhill Company will continue to use this copyright in the future. As of December 31, 2017, the copyright is estimated to have a remaining useful life of 10 years.

(a)

Prepare the journal entry to record the impairment of the asset at December 31, 2017. The company does not use accumulated amortization accounts. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)