Exercise 12-8 https://edugen.wileyplus.com/edugen/shared/assignment/test/qprint.

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ACCT 373-01 FALL'19 Courts / Ch 12 HW practice

*Exercise 12-8
Carter Company has provided information on intangible assets as follows.

A patent was purchased from Ford Company for $2,000,000 on January 1, 2016. Carter estimated the
remaining useful life of the patent to be 10 years. The patent was carried in Ford’s accounting records
at a net book value of $2,000,000 when Ford sold it to Carter.

During 2017, a franchise was purchased from Polo Company for $480,000. In addition, 5% of revenue
from the franchise must be paid to Polo. Revenue from the franchise for 2017 was $2,500,000. Carter
estimates the useful life of the franchise to be 10 years and takes a full year’s amortization in the year
of purchase.

Carter incurred research and development costs in 2017 as follows.

Materials and equipment $142,000

Personnel 189,000

Indirect costs 102,000

$433,000

Carter estimates that these costs will be recouped by December 31, 2020. The materials and
equipment purchased have no alternative uses.

On January 1, 2017, because of recent events in the field, Carter estimates that the remaining life of
the patent purchased on January 1, 2016, is only 5 years from January 1, 2017.

Your answer is partially correct. Try again.

Prepare the intangibles section of Carter’s balance sheet at December 31, 2017. (Enter account
name only and do not provide descriptive information.)

CARTER COMPANY
Intangibles Section of Balance Sheet
December 31, 2017

Intangible Assets

Total Intangible Assets

$

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Exercise 12-8 https://edugen.wileyplus.com/edugen/shared/assignment/test/qprint.uni

Your answer is partially correct. Try again.

Prepare the income statement effect (related to expenses) for the year ended December 31, 2017, as a
result of the facts above. (Enter account name only and do not provide descriptive
information.)

CARTER COMPANY
Income Statement Effect
For the Year Ended December 31, 2017

Patent from Ford Company :

Patent from Ford Company

$

Franchise from Polo Company :

Payment to Polo Company

$

Franchise from Polo Company

Amortization of patent

Total charged against income

$

Question Attempts: 2 of 15 used

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