Question
Sandhill Company has provided information on intangible assets as follows. A patent was purchased from Teal Mountain Company for $1,750,000 on January 1, 2019. Sandhill
Sandhill Company has provided information on intangible assets as follows. A patent was purchased from Teal Mountain Company for $1,750,000 on January 1, 2019. Sandhill estimated the remaining useful life of the patent to be 10 years. The patent was carried in Teal Mountains accounting records at a net book value of $1,750,000 when Teal Mountain sold it to Sandhill. During 2020, a franchise was purchased from Monty Company for $450,000. In addition, 5% of revenue from the franchise must be paid to Monty. Revenue from the franchise for 2020 was $2,380,000. Sandhill estimates the useful life of the franchise to be 10 years and takes a full years amortization in the year of purchase. Sandhill incurred research and development costs in 2020 as follows.
Materials and equipment | $153,000 | |
Personnel | 181,000 | |
Indirect costs | 116,000 | |
$450,000 |
Sandhill estimates that these costs will be recouped by December 31, 2023. The materials and equipment purchased have no alternative uses. On January 1, 2020, because of recent events in the field, Sandhill estimates that the remaining life of the patent purchased on January 1, 2019, is only 5 years from January 1, 2020.
(a)
Correct answer icon
Your answer is correct.
Prepare the intangibles section of Sandhills balance sheet at December 31, 2020. (Enter account name only and do not provide descriptive information.)
SANDHILL COMPANY Intangibles Section of Balance Sheet choose the accounting period December 31, 2020For the Month Ended December 31, 2020For the Year Ended December 31, 2020 | ||||||
---|---|---|---|---|---|---|
select an opening section name Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity | ||||||
enter a balance sheet item | $enter a dollar amount | |||||
enter a balance sheet item | enter a dollar amount | |||||
select a closing section name Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity | $enter a total amount for this section |
eTextbook and Media
Assistance Used
List of Accounts
Attempts: 2 of 3 used
(b)
New attempt is in progress. Some of the new entries may impact the last attempt grading.
Your answer is partially correct.
Prepare the income statement effect (related to expenses) for the year ended December 31, 2020, as a result of the facts above. (Enter account name only and do not provide descriptive information.)
SANDHILL COMPANY Income Statement Effect choose the accounting period For the Month Ended December 31, 2020December 31, 2020For the Year Ended December 31, 2020 | ||||
---|---|---|---|---|
select an opening name for section one Amortization of patent research and development costsAmortization of franchisePatent from Teal Mountain CompanyPayment to Monty CompanyTotal charged against income franchise from Monty Company: | ||||
select an item Franchise from Monty CompanyAmortization of franchise payment to Monty CompanyResearch and development costsTotal charged against incomePatent from Teal Mountain CompanyAmortization of patent | $enter a dollar amount | |||
select an opening name for section two Patent from Teal Mountain CompanyAmortization of patentPayment to Monty CompanyResearch and development costsAmortization of franchise total charged against income franchise from Monty Company: | ||||
select an item Total charged against incomeAmortization of patentPayment to Monty CompanyResearch and development costsAmortization of franchisePatent from Teal Mountain CompanyFranchise from Monty Company | $enter a dollar amount | |||
select an item Franchise from Monty CompanyPayment to Monty CompanyResearch and development costsAmortization of patentTotal charged against incomeAmortization of franchisePatent from Teal Mountain Company | enter a dollar amount | |||
enter a subtotal of the two previous amounts | ||||
select an item Research and development costs amortization of patent patent from Teal Mountain CompanyTotal charged against incomeFranchise from Monty CompanyPayment to Monty CompanyAmortization of franchise | enter a dollar amount | |||
select a closing name Patent from Teal Mountain CompanyTotal charged against incomeResearch and development costsAmortization of patentPayment to Monty CompanyFranchise from Monty CompanyAmortization of franchise | $enter a total amount |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started