Xedugen.wileyplus.com Assignmens>Open Assignment Field Corp s controller was pre
ID: 2558583 • Letter: X
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Xedugen.wileyplus.com Assignmens>Open Assignment Field Corp s controller was preparing the year-end adjusting entries for the company's year ended December 31, 2017, when the V.P. Finance called him into her office ASSIGNMENT RESOURCES Exercise 215 Jean-Pierre,"she said, "Tve been considering a couple of matters that may require different treatment this year. First, the patent we acquired in early January 2015 for $567,000 will now likely be used until the end of 2019 and then be sold for $179,000. We previously thought that we'd use it for 10 years in total and then be able to sell it for $133,000. We've been using straight-line amortization on the patent. Second, just discovered that the property we bought on july 2, 2014 for $267,200 was charged entirely to the Land account instead of being allocated between Land ($63,200) and Building ($204,000. The building should be of use to us for a total of 20 years. At that point, ien be sold and we should be able to realize at least $47,400 from the sale of the building Please let me know how these changes should be accounted for and what effect they will have on the financial statements Field Corp. follows IFRS. Answer the following. ignoring income tax considerations and assurning that the company has not previously reported quarterly results. Assuming that no amortization has been recorded as yet for the patent for 2017, prepare the December 31, 2017 entries that are necessary to make the accounting changes and to record patent amortization expense for 2017.(Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts) Date Account Titles and Explanation Debit Credit Dec. 31Explanation / Answer
Calulation of Amortisation Cost on patent
In 2015 amortisation expense = 567000 - 133000 / 10 = 43400
In 2016 exp = 43400
Opening balance in 2017 = 567000 - 43400 - 43400 = 480200
In 2017, salvage value and life of patent to be consider $179000 and balance 3 years life
Amortisation exp = 480200 - 179000 / 3 =100400
Amortisation on Patent A/c Dr 100400
to Patent 100400
2. Building A/c Dr 204000
to Land A/c 204000
Calulation of Depreciation on Building
Depreciation = 204000 - 47400 / 20 = 7830
Depreciation for 2014 = 7830/12 * 6 = 3915
Depreciation for 2015 = 7830/12 * 12 = 7830
Depreciation for 2016 = 7830/12 * 12 = 7830
Total Prior period Depreciation = 3915 + 7830 + 7830 = 19575
Prior Period dep a/c dr 19575
Depreciation on /building dr 7830
to Building 27405
2. Change in amortisation expenses = Curreny year - previous year
= 100400 - 43400 = 57000 (Increase)
No Increase or Decrease in Depreciation
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