Bill's Brick Company has just filed a new patent for a new machine to speed up brick production. The patent cost the company $40,000 in research and development fees throughout Year 1. On July 1st, Year 2, the company incurred $9,000 in legal fees and $6,000 in filing fees for the patent. Upon filing the patent, Bill's machine enjoys a 20-year life protected from patent infringement. Using the information provided, record the journal entry for amortization expense related to the patent for Year 2. Assume Bill's Brick Company does not use a contra account to record amortization expense.
Jaipur Rug Company just purchased a new piece of equipment to help their employees weave rugs more efficiently. The equipment cost $8,000, and managers estimate that the salvage value of the equipment is $1,500. Assume Jaipur uses activity-based depreciation, and the equipment helps manufacture 681 rugs in year one and 817 rugs in year 2. Overall, the equipment will probably last long enough to help Jaipur manufacture 2,500 rugs. What is the net book value of the equipment at the end of the second year, after all adjusting entries have been recorded? Round your final answer to two decimal places.
Using the dropdowns provided, answer the following true or false questions.
CancerCure Co. has developed a drug that will cure lung cancer in a single dose. CancerCure spent $90,000 on lab space and $9,000,000 on scientist salaries to develop the drug. CancerCure also spent $10,000 to file a patent on the drug with the US government. Further, CancerCure successfully sued another company who tried to steal the recipe for the drug and spent $5,000 on legal fees. True or false: CancerCure's patent should be valued at $10,000 on its balance sheet.
When a piece of equipment lasts longer than expected, a company must record a gain.
Elspeth realizes that equipment she spent a lot of money on is worth much less than expected, so she records an impairment loss. True or false: This entry will require a reduction to the equipment's Accumulated Depreciation.
Ronaldo Company decides to retire a piece of equipment. At the time of retirement, the equipment has a net book value of $150. True or false: This retirement will definitely result in a loss.
If a company determines that an asset is impaired, it should record an impairment loss for the difference between the net book value and estimated future cash flows.