Chapter 12: Q29. (page 610)
What are the main distinctions between a traditional financial instrument and a derivative financial instrument?
There are many differences between a traditional financial instrument and a derivative financial instrument. Some of the differences are payment of cost, disclosure of risk, etc.
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An intangible asset with an estimated useful life of 30 years was acquired on January 1, 2007, for $540,000. On January 1, 2017, a review was made of intangible assets and their expected service lives, and it was determined that this asset had an estimated useful life of 30 more years from the date of the review. What is the amount of amortization for this intangible in 2017?
Indicate how unrealized holding gains and losses should be reported for debt investments classified as trading, available-for-sale, and held-to-maturity.
Question: Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for intangible assets.
Question: As the recently appointed auditor for Bryan Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2017, are prepared. The controller for Bryan Corporation mentions that only one account is kept for intangible assets. The account is shown below.
Intangible assets | ||||
Debit | Credit | Balance | ||
Jan. 4 | Research and development costs | 940,000 | 940,000 | |
Jan. 5 | Legal costs to obtain patent | 75,000 | 1,015,000 | |
Jan. 31 | Payment of 7 months’ rent on property leased by Bryan | 91,000 | 1,106,000 | |
Feb. 11 | Premium on common stock | 250,000 | 856,000 | |
March 31 | Unamortized bond discount on bonds due March 31, 2037 | 84,000 | 940,000 | |
April 30 | Promotional expenses related to start-up of business | 207,000 | 1,147,000 | |
June 30 | Operating losses for first 6 months | 241,000 | 1,388,000 |
Instructions
Prepare the entry or entries necessary to correct this account. Assume that the patent has a useful life of 10 years.
Hillsborough Co. has a held-to-maturity investment in the bonds of Schuyler Corp. with a carrying value of \(70,000. Hillsborough determined that due to poor economic prospects for Schuyler, the bonds have decreased in value to \)60,000. It is determined that this loss in value is uncollectible. Prepare the journal entry, if any, to record the reduction in value.
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