Accounting II Week 2 Exercises and Problems

Accounting II Week 2 Exercises and Problems

Exercises and Problems XACC/291 Principles of Accounting II Week 2 February 8, 2015
Exercise E9–1 The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011 (determine cost of the plant acquisitions). 1. Paid $5,000 of accrued taxes at time plant site was acquired. 2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit. 3. Paid $850 sales taxes on new delivery truck. 4. Paid $17,500 for parking lots and driveways on new plant site. 5. Paid $250 to have company name and advertising slogan painted on new delivery truck. 6. Paid $8,000 for installation of new factory machinery. 7. Paid $900 for ... Show more content on Helpwriting.net ...The copyright was acquired in January 2008 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2012 (Prepare entries to record transactions related to acquisition and amortization of intangibles; prepare the intangible assets section). Jan.2 Paid $45,000 legal costs to successfully defend the patent against infringement by another company. Jan.–June Developed a new product, incurring $230,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life. Sept.1 Paid $125,000 to an X–games star to appear in commercials advertising the company's products. The commercials will air in September and October. Oct.1 Acquired a copyright for $200,000.The copyright has a useful life of 50 years.
Instructions: (a) Prepare journal entries to record the transactions above.
(b) Prepare journal entries to record the 2012 amortization expense for intangible assets (amortization Expense– Patents $15,000; Amortization Expense– Copyrights $7,000).
Dec 31 Amortization Expense–Patents $15,000 Dec 31 Amortization

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