1. On July 1, 2010, Jablonski Products purchased the net assets of Duquesne Industries for $285,000 (cash of $85,000 and a short-term note payable of $200,000). The assets included current assets of $125,000, property, plant, and equipment with a fair value of $250,000 (book value of $300,000), and a trademark valued at $150,000. Jablonski assumed liabilities totaling $200,000.

The entry to record the purchase would include:

Group of answer choices

A) A debit to Goodwill of $40,000

B) A credit to Gain on Purchase of $90,000

C) A credit to Goodwill of $40,000

D) A debit to Goodwill of $90,000

E) A credit to Gain on Purchase of $40,000

Orlando Packaging Company purchased a patent on a box-folding machine for $160,000 on July 1, 2012. The useful life was estimated at 20 years. There were 19 years remaining on the patent when it was purchased. In 2019, the CEO of Orlando Packaging noted a decrease, industry-wide, in the demand for folded boxes. As a result, an impairment analysis was done as of June 30, 2019. The CEO estimated that the patent had a remaining useful life of 5 years. Expected annual cash flows over the next 5 years were estimated at $20,000. The discount rate used by Orlando Packaging is 5%. The present value of the cash flows is $14,463

1. Was the Orlando Packaging Company patent impaired at June 30, 2019? If so, what was the amount of the impairment loss?

A) No; $0

B) Yes; $14,463

C) Yes; $17,410

D) Yes; $4,000

____________ and ___________ are compared when determining the amount of a possible impairment loss on an indefinite life intangible asset.

A) Fair value of asset, present value of future cash flows

B) Future value of asset, carrying value of asset

C) Carrying value of asset, book value of asset

D) Fair value of asset, carrying value of asse

E) Future value of asset, present value of future cash flows

1. Wine & Dine purchased a customer list from a nearby gourmet grocery for $20,000 on January 1, 2017. The expected service life was 10 years with an expected residual value of $2,000. Since the list would be most valuable (most current) in the first few years, the company elected to use double-declining balance method of amortizing the cost. By December 31, 2019, it was clear that the customers on the list were more transient than Wine & Dine expected. The owners believed that the list would continue to have value through December 31, 2021, but that there would be no residual value. The amortization method was switched to straight-line.

What was the carrying value of customer list on December 31, 2019? What was amortization expense for 2020?

Group of answer choices

A) $9,760; $4,880

B) $10,240; $5,120

C) $10,496; $5,248

D) $9,200; $4,600

1. Regal Properties was amortizing a finite life intangible asset over 15 years. In the 12^th year, the company revised the service life to 18 years.

Regal should account for the change by ___________________.

A) crediting beginning Retained Earnings and debiting Accumulated Amortization

B) reducing the amount of amortization expense in the next three years

C) increasing the amount of amortization expense in the next six years

D) reducing the amount of amortization expense in the next six years

E) debiting Intangible Asset and crediting Amortization Expense to correct the carrying value of the intangible asset

1. Greenbelt Tech Products completed a working model of a new computer software program at a cost of $50,000 in the first half of 2019. The company registered for copyright protection on July 1, 2019. The software was available for sale on September 1, 2019. The company expects to sell the products for a minimum of 5 years; a maximum of 10 years. Copyright protection lasts for 95 years.

What would amortization expense be through December 31, 2019 (amortized using the straight-line method)?

Group of answer choices

A) $263

B) $1,667

C) $2,222

D) $3,333

E) $0

1. Which of the following statements is not accurate?

A) Research and development costs, in total, must be disclosed for every period presented in the financial statements

B) Depreciation on equipment used for research activities would be recognized as operating expense

C) Cost of significant modifications to product designs are expensed as research and development expenses.

D) The cost of a patent purchased for multiple research products is capitalized as an intangible asset

E) The cost of a license purchased for use in one research product is expensed as a research and development cost.