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    Intangible Assets Soln-V2

    Uploaded by

    Shane Kim
    Cartwright Corporation recorded various intangible asset transactions in its Intangible Assets account during the year, including paying incorporation fees, legal fees for organization, advertising expenses, acquiring a building and land for research and development activities, purchasing materials for R&D projects, patent expenses, an experimental machine, and salaries for R&D employees. Many of these items were incorrectly recorded as intangible assets and should have been expensed or treated differently based on their nature.

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    Intangible Assets Soln-V2

    Uploaded by

    Shane Kim
    76 views2 pages
    Cartwright Corporation recorded various intangible asset transactions in its Intangible Assets account during the year, including paying incorporation fees, legal fees for organization, advertising expenses, acquiring a building and land for research and development activities, purchasing materials for R&D projects, patent expenses, an experimental machine, and salaries for R&D employees. Many of these items were incorrectly recorded as intangible assets and should have been expensed or treated differently based on their nature.

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    Intangible assets soln-v2

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    Intangible assets soln-v2

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    Cartwright Corporation recorded various intangible asset transactions in its Intangible Assets account during the year, including paying incorporation fees, legal fees for organization, advertising expenses, acquiring a building and land for research and development activities, purchasing materials for R&D projects, patent expenses, an experimental machine, and salaries for R&D employees. Many of these items were incorrectly recorded as intangible assets and should have been expensed or treated differently based on their nature.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    76 views2 pages

    Intangible Assets Soln-V2

    Uploaded by

    Shane Kim
    Cartwright Corporation recorded various intangible asset transactions in its Intangible Assets account during the year, including paying incorporation fees, legal fees for organization, advertising expenses, acquiring a building and land for research and development activities, purchasing materials for R&D projects, patent expenses, an experimental machine, and salaries for R&D employees. Many of these items were incorrectly recorded as intangible assets and should have been expensed or treated differently based on their nature.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Correct Classification of Intangibles During the current year, Cartwright Corporation’s

    accountant recorded numerous transactions in an account entitled Intangible Assets, as


    follows: 

    Jan. 2 Paid incorporation fees. $17,500 


    Jan 2 Fees Dr 17500
    Cash Cr 17500

    11 Paid legal fees for the organization of the company. 7,500 


    Jan 11 Legal Fee Dr 7500
    Cash Cr 7500

    25 Paid for large-scale advertising campaign for the year. 15,000 


    Jan 25 Advtg Exp Dr 15000
    Cash Cr 15000

    Apr. 1 Acquired land for $15,000 and a building for $20,000 to house the R&D activities.
    The building has a 20-year life. 35,000 
    Apr 1 Land Dr 15000
    Building Dr 20000
    Cash Cr 35000

    Dec 31 R&D Exp Dr 750


    Accumulated Dep-Bldg Cr 750
    (Depreictaion using SLN for 9 month = (20000/20)*(9/12) = 750)

    May 15 Purchased materials exclusively for use in R&D activities. Of these materials,
    20% are left at the end of the year and will be used in the same project next year. (They
    have no alternative use.) 15,000 
    May 15 R&D Material Dr 15000
    Cash Cr 15000

    Dec 31 R&D Exp Dr 12000


    R&D Material Cr 12000

    June 30 Paid expenses related to obtaining a patent. 10,000 


    Jun 30 Patent Expenses Dr 10000
    Cash Cr 10000

    Dec. 11 Purchased an experimental machine from an inventor. The machine is


    expected to be used for a particular R&D activity for 2 years, after which it will have no
    residual value. 12,000 
    Dec 11 Machine A/c Dr 12000
    Cash Cr 12000

    Dec 31 R&D Exp Dr 333


    Accumulated Dep Cr 333
    (Dep for 20 days upto 31 Dec. 2 Yr Life. (12000/2)*(20/360) = 333)

    31 Paid salaries of employees involved in R&D. 30,000 


    Dec 31 R&D expenses Dr 30,000
    Cash Cr 30,000
    (Salary to R&D Staff is expensed as R&D Expenses)

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