Answer :
a)Bridgeport corporation intangible assets Dec 31 2017
Franchise = $ 45,000
Trademark = $ $ 66,529.00
Patent = $ 22,4000
Total intangible assets = $ 45,000 + $ $ 66,529.00 + $ 22,400
= $ 133,929.00
Total intangible assets = $ 133,929.00
Explanation :
Particulars | Amount |
Franchise cost | $ 50,000.00 |
Less :Amortization of franchise of 10 years |
=$ 50,000 / 10 =$ 5,000.00 |
Total value of franchise cost |
= $ 50,000 - $ 5,000 =$ 45,000 |
Patent | $ 25,600.00 |
Less : Amortization expenses |
= $ 25,600 / 8 =$ 3,200.00 |
Total patent at Dec 31 |
= $ 25,600 - $ 3,200 =$ 22,400.00 |
Cost of trademark | $ 50,000 |
Less : Amortization of trademark |
= ($ 50,000 * 3) / 20 = $ 150,000 / 20 = $ 7,500.00 |
Total value of trademark at July 1 |
= $ 50,000 - $ 7,500 = $ 42,500.00 |
Add : Cost of sucessfull defence | $ 25,500.00 |
Carried value at July 1 |
= $ 42,500 + $ 25,500 = $ 68,000.00 |
Less : Amortization of trademark |
= ($ 50,000 * 1) / 2 / (20 - 3) = ($ 50,000 / 2) / 17 = $ 1471.00 |
Total value of trademark at Dec 31 |
= $ 68,000 - $ 1471 = $ 66,529.00 |
b)Prepare a schedule showing all expenses resulting from the transactions that would appear on Bridgeport income statement for the year ended December 31, 2010. Show supporting computations in good form.
Particulars | Amount |
Interest expenses |
= $32,400 * 9 % = $ 32,400 * 0.09 = $ 2,916 |
Franchise amortization |
= ($ 10,000 + $ 32,400) / 10 = $ 42,400 / 10 = $ 4,240 |
Franchise fee |
= $ 840,000 * 6 % = $ 840,000 * 0.06 = $ 50,400 |
Patent amortization |
= $ 25,600 / 8 = $ 3,200 |
Trademark amortization |
= ( $ 50,000 / 20) * (6/12) + ( 68,000 / 17 ) * (6/12) = $ 2,500 * 0.5 + 4,000 * 0.5 = $ 1,250 + $ 2,000 = $ 3,250 |
Total tangible assets |
= $ 2,916 + $ 4,240 + $ 50,400 + $ 3,200 + $ 3,250 =$ 64,006 |
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