Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 5: BE-5-5 (page 239)

Crane Corporation has the following accounts included in its December 31, 2017, trial balance: Equity Investments (trading) \(21,000, Goodwill \)150,000, Prepaid Insurance \(12,000, Patents \)220,000, and Franchises $130,000. Prepare the intangible assets section of the balance sheet.

Short Answer

Expert verified

Total intangible assets of the business entity total $500,000.

Step by step solution

01

Definition of Intangible Assets

The business’s resources that cannot be seen and touched are intangible assets. Even they do not have any physical existence; they provide an inflow of benefits to the business entity.

02

Intangible Asset Section

Particular

Amount $

Goodwill

$150,000

Patent

220,000

Franchises

130,000

Total intangible assets

$500,000

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Lansbury Inc. had the following balance sheet on December 31, 2016.

LANSBURY INC.

BALANCE SHEET

DECEMBER 31, 2016

Cash

\(20,000

Account payable

\)30,000

Accounts receivables

21,200

Note payable

41,000

Investment

32,000

Common stock

100,000

Plant assets (net)

81,000

Retained earnings

23,200

Land

40,000

\(194,200

\)194,200

During 2017, the following occurred.

1. Lansbury Inc. sold part of its debt investment portfolio for \(15,000. This transaction resulted in a gain of \)3,400 for the firm. The company classifies these investments as available for sale.

2. A tract of land was purchased for \(13,000 cash.

3. Long-term notes payable in the amount of \)16,000 were retired before maturity by paying \(16,000 cash.

4. An additional \)20,000 in common stock was issued at par.

5. Dividends of \(8,200 were declared and paid to stockholders.

6. Net income for 2017 was \)32,000 after allowing for depreciation of \(11,000.

7. Land was purchased through the issuance of \)35,000 in bonds.

8. At December 31, 2017, Cash was \(37,000, Accounts Receivable was \)41,600, and Accounts Payable remained at $30,000.

Instructions

(a) Prepare a statement of cash flows for 2017.

(b) Prepare an unclassified balance sheet as it would appear at December 31, 2017.

(c) How might the statement of cash flows help the user of the financial statements? Compute two cash flow ratios.

BE5-8 (L03) Included in Adams Company’s December 31, 2017, trial balance are the following accounts: Accounts Payable \(220,000, Pension Liability \)375,000, Discount on Bonds Payable \(29,000, Unearned Rent Revenue \)41,000, Bonds Payable \(400,000, Salaries and Wages Payable \)27,000, Interest Payable \(12,000, and Income Taxes Payable \)29,000. Prepare the current liabilities section of the balance sheet.

Aero Inc. had the following balance sheet at December 31, 2016.

LANSBURY INC.

BALANCE SHEET

DECEMBER 31, 2016

Cash

\(20,000

Account payable

\)30,000

Accounts receivables

21,200

Bond payable

41,000

Investment

32,000

Common stock

100,000

Plant assets (net)

81,000

Retained earnings

23,200

Land

40,000

\(194,200

\)194,200

During 2017, the following occurred.

1. Aero liquidated its available-for-sale debt investment portfolio at a loss of \(5,000.

2. A tract of land was purchased for \)38,000.

3. An additional \(30,000 in common stock was issued at par.

4. Dividends totaling \)10,000 were declared and paid to stockholders.

5. Net income for 2017 was \(35,000, including \)12,000 in depreciation expense.

6. Land was purchased through the issuance of \(30,000 in additional bonds.

7. At December 31, 2017, Cash was \)70,200, Accounts Receivable was \(42,000, and Accounts Payable was \)40,000.

Instructions

(a) Prepare a statement of cash flows for the year 2017 for Aero.

(b) Prepare the unclassified balance sheet as it would appear at December 31, 2017.

(c) Compute Aero’s free cash flow and current cash debt coverage for 2017.

(d) Use the analysis of Aero to illustrate how information in the balance sheet and statement of cash flows helps the user of the financial statements.

The creditors of Chester Company agree to accept promissory notes for the amount of its indebtedness with a proviso that two-thirds of the annual profits must be applied to their liquidation. How should these notes be reported on the balance sheet of the issuing company? Give a reason for your answer

According to generally accepted accounting principles, what is the balance sheet valuation of each of the following assets?

(a) Trade accounts receivable.

(b) Land.

(c) Inventories.

(d) Trading securities (common stock of other companies).

(e) Prepaid expenses.
See all solutions

Recommended explanations on Business Studies Textbooks

Business Development

Read Explanation

Corporate Finance

Read Explanation

Strategic Analysis

Read Explanation

Managers

Read Explanation

Strategic Direction

Read Explanation

Influences On Business

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free