INTAGIBLES ASSETS

Question 1

calc the amount the patent should be capitalized?

Answer 1

Patent license 40,000
successful right of patent 50,000

                                         90,000

Question 2

Calc, the royalty revenue?

Answer 2

Patents sales over the 4 years are 300,000 x 10% = 30,000

Question 3

calc, the interest expense the loan?

Answer 3

Paid interest total 100,000
prepaid interest 5500
interest payable 8500

interest expense 114,000

Question 4

Calc, trademark intial asset recognition criteria recognize amount?

Answer 4

Purchase price 100,000
Taxes. 5,000
Legal register 10,500

= 115,500

Question 5

Calc, patent the exchange of what the transaction is worth?

Answer 5

When intangible asset is acquired in an exchange transaction intial recognition is at FV

2000 shares x 40 per share = 80,000

Question 6

How are organizational and start up cost treated?

Answer 6

expensed immediately

Question 7

Do we amortize intangible asset?

Answer 7

No

Question 8

How are Legal costs in defense of patent successful litigation treated?

Answer 8

Capitalized and amortized over the shorter of the remaining legal life or estimated useful life

Question 9

How are unsuccessful litigiation of patent treated?

Answer 9

expensed as incurred

Question 10

CALC THE AMOUNT NET OF ACCUMULATED AMORTIZATION ?

Answer 10

COST RELATED TO PATENT 136,000
PATENT EQUAL 34,000
PATENTS USEFUL LIFE 20
ESTIMATED ECONOMIC LIFE 10

                                                  3,400
                                                         6
                                                       12
                                                  1,700

report as patent net of accumulated amortization 32,300

Question 11

What happens to litigation costs when patents are successfully treated?

Answer 11

litigation cost would be capitalized if the patent is right and successfully defended

Question 12

Calc, the royalty income?

Answer 12

We need Gross Sales 600,000 x (100%-1%) 99%

600,000 x 99% = 594,000

594,000 x 10% = 59,400

Question 13

Should legal fees to obtain a franchise and to defend a trademark successfully be capitalized?

Answer 13

Both legal fees to obtain franchise and to defend a trademark successfully

Question 14

Calc, the franchise related amortization for december balance sheet?

Answer 14

The franchise should capitalize the costs of acquiring the franchise. The calc should include the legal fees to acquire the asset and future payment of revenue for the franchise services

60,000 / 5 years = 12,000

60,000 - 12,000 = 48,000

Question 15

Calc, the interest expense for clay report?

Answer 15

Clay paid prepaid interest

last year 23,500 - 18,000 this year = 5,500 Prepaid interest

Prepaid Interest 5,500

This year 53,500 - 45,000 = 8500

Interest Expense

This Year 53,500 - 45,000 = 8500

Paid Interest 100,000 + 5500 + 8500 = 114,000

Question 16

Calc, the interest expense for the agreement involving discounts and notes?

Answer 16

Here we will first subtract the prepaid interest between

Last year this year
23,000 - 18,000 = 5,500

Last year This year
45,500 - 53,500 = 8,500

100,000 cash payments
5,500
8,500

= 114,000 interest expense