On July 31, 2017, Crane Company paid $2,750,000 to acquire all of the common stock of Conchita Incorporated, which became a division of Crane. Conchita reported the following balance sheet at the time of the acquisition.

Current assets		$890,000		Current liabilities		$580,000
Noncurrent assets		2,450,000		Long-term liabilities		480,000
Total assets		$3,340,000		Stockholders equity		2,280,000
				Total liabilities and stockholders equity		$3,340,000

It was determined at the date of the purchase that the fair value of the identifiable net assets of Conchita was $2,480,000. Over the next 6 months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foreseeable future. At December 31, 2017, Conchita reports the following balance sheet information.

Current assets		$430,000
Noncurrent assets (including goodwill recognized in purchase)		2,370,000
Current liabilities		(600,000	)
Long-term liabilities		(400,000	)
Net assets		$1,800,000

It is determined that the fair value of the Conchita Division is $1,850,000. The recorded amount for Conchitas net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value $100,000 above the carrying value.

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(a)

Compute the amount of goodwill recognized, if any, on July 31, 2017.

The amount of goodwill

Problem 12-3 (Part Level Submission)

Information concerning Cheyenne Corporations intangible assets is as follows.

1.		On January 1, 2017, Cheyenne signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $65,000. Of this amount, $13,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $13,000 each, beginning January 1, 2018. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2017, of the 4 annual payments discounted at 10% (the implicit rate for a loan of this type) is $41,210. The agreement also provides that 4% of the revenue from the franchise must be paid to the franchisor annually. Cheyennes revenue from the franchise for 2017 was $900,000. Cheyenne estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.)
2.		Cheyenne incurred $60,000 of experimental and development costs in its laboratory to develop a patent that was granted on January 2, 2017. Legal fees and other costs associated with registration of the patent totaled $22,400. Cheyenne estimates that the useful life of the patent will be 8 years.
.		3.A trademark was purchased from Shanghai Company for $44,000 on July 1, 2014. Expenditures for successful litigation in defense of the trademark totaling $17,000 were paid on July 1, 2017. Cheyenne estimates that the useful life of the trademark will be 20 years from the date of acquisition. Prepare a schedule showing all expenses resulting from the transactions that would appear on Cheyennes income statement for the year ended December 31, 2017. (Round all answers to 0 decimal places, e.g. 8,564.) Problem 11-11 (Part Level Submission) On January 1, 2015, a machine was purchased for $108,000. The machine has an estimated salvage value of $7,200 and an estimated useful life of 5 years. The machine can operate for 120,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2015, 24,000 hrs; 2016, 30,000 hrs; 2017, 18,000 hrs; 2018, 36,000 hrs; and 2019, 12,000 hrs. Assume a fiscal year-end of September 30. Compute the annual depreciation charges over the assets life applying each of the following methods