Law-Forums.org

[vipponah]

1. Boyer Industries purchased equipment costing 48,000 on January 1, 2005. The equipment has a 5-year useful life, $8,000 salvage value, and is being depreciated using the straight-line method. It was sold at a $5,000 loss on June 30, 2010. The selling price of the equipment was?

2. McGurk Corporation incurred $85,000 of research and development cost to produce a high technology solar computer, paid filling fees of $5,000 to register a patent on this product, and paid $47, 500 to defend the patent against infringement by the competitor All of these costs were incurred in 2009. Production of solar computers began on January 1, 2010. Assuming the patent has a useful life of 15 years, patent expense for 2010 is?


PS> Please direct me on how you have found the answer

[rheged]

1) Book value at June 30, 2010: 48,000 - 36,000 = 12,000
Original cost 48,000
Accumulated Depreciation 1/1/05 - 6/30/10:
(48,000 - 8,000) / 5 = 8,000 per year x 4.5 years = 36,000
Selling Price (if 5,000 loss): 12,000 - 5,000 = 7,000

2) Total cost of patent: 137,500 (85,000 + 5,000 + 47,500)
annual amortization = 137,500 / 15 = 9,166.67