On September 30,2015 Purple Chip Technologies purchased a computer chip patent f

ID: 2460447 • Letter: O

Question

On September 30,2015 Purple Chip Technologies purchased a computer chip patent for $80,000. Due to rapid obsolescence for technological patents, Purple Chip estimates the useful life of this patent to only be 5 years. On September 30,2016, Purple Chip spent $32,000 defending the patent. What will be the book value for this patent at the end of 201. $42,000 $46,000 $66,000 $70,000 $90,000 On June 1,2015 Cycology Corporation signs a $100,000, 7.5% three-mon no e August 1,2015 with Farmers and Merchants Bank. The market interest rate is o. Cycology's year end is June 30th. What is Cycology's journal entry on September when the note is due, assuming they only accrue expenses when they issue financial statements?

Explanation / Answer

= 16,000 31, 2016

= 16,000 31 , 2017

$36,000

32,000/4 = 8,000 * 3/12 = 2,000 december 31,2016

= 8,000 December 31 ,2017

$10,000

Total patent (80,000 + 32,000) - 46,000

= $66,000

2) interest accrued $100,000 @7.5%*1/12 = 625

100,000 @ 7.50 *2/12 = 1,250

Notes payable

$100,000

Interest payable

625

Interest expense

1,250

To cash

$ 101,875

16,000 * 3/12 = 4,000 for December 31, 2015