Presented below is selected information for Galal Corp.

(a) On January 1, 2022, Galal incurred organization costs of 275,000. What amount of organization expense should be reported in 2022, and in which financial statement?

(b) Galal bought a franchise from Farah Corp. on January 1, 2021, for 200,000. The carrying amount of the franchise on Farah's books on January 1, 2021, was 250,000. The franchise agreement had an estimated useful life of 10 years. Because Galal must enter a competitive bidding at the end of 2030, it is unlikely that the franchise will be retained beyond 2030. What amount should be amortized for the year ended December 31, 2022?

(c) Galal purchased a patent from Taha Group for 500,000 on January 1, 2020. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2027. During 2022, Galal determined that the economic benefits of the patent would not last longer than 6 years from the date of acquisition. What amount should be reported in the statement of financial position for the patent, net of accumulated amortization, on December 31, 2022?

(d) Galal purchased the license for the distribution of a popular consumer product on January 1, 2022, for 75,000. It is expected that this product will generate cash flows for an indefinite period of time. The license has an initial term of 5 years but by paying a nominal fee, Galal can renew the license indefinitely for successive 5-year terms. What amount should be amortized for the year ended December 31, 2022?

Instructions

Answer the questions asked about each of the factual situations.