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Chapter 5: Q5BE (page 239)

BE5-5 (L03) 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

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Most popular questions from this chapter

2. Current assets under IFRS are listed generally:

(a) by importance.

(b) in the reverse order of their expected conversion to cash.

(c) by longevity.

(d) alphabetically.

Grant Wood Corporation’s balance sheet at the end of 2016 included the following items.

Current assets (\(Cash 82,000)

\)235,000

Current liabilities

\(150,000

Land

30,000

Bond payable

100,000

Building

120,000

Common stock

180,000

Equipment

90,000

Retained earnings

44,000

Accumulated depreciation – Building

(30,000)

Accumulated depreciation – Equipment

(11,000)

Patents

40,000

Total

\)474,000

Total

\(474,000

The following information is available for 2017.

1. Net income was \)55,000.

2. Equipment (cost \(20,000 and accumulated depreciation \)8,000) was sold for \(10,000.

3. Depreciation expense was \)4,000 on the building and \(9,000 on equipment.

4. Patent amortization was \)2,500.

5. Current assets other than cash increased by \(29,000. Current liabilities increased by \)13,000.

6. An addition to the building was completed at a cost of \(27,000.

7. A long-term investment in stock was purchased for \)16,000.

8. Bonds payable of \(50,000 were issued.

9. Cash dividends of \)30,000 were declared and paid.

10. Treasury stock was purchased at a cost of $11,000.

Instructions

(Show only totals for current assets and current liabilities.)

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

(b) Prepare a balance sheet at December 31, 2017.

(Critique of Balance Sheet Format and Content) The following is the balance sheet of Sameed Brothers Corporation (000s omitted).

SAMEED BROTHERS CORPORATION

BALANCE SHEET

DECEMBER 31, 2017

Assets

Current assets

Cash

\(26,000

Marketable securities

18,000

Accounts receivables

25,000

Inventory

20,000

Supplies

4,000

Stock investment in subsidiary company

20,000

\)113,000

Investment

Treasury stock

25,000

Property, Plant and Equipment

Building and land

91,000

Less: Reserve for depreciation

(31,000)

60,000

Other assets

Cash Surrender value of life insurance

19,000

Total assets

\(217,000

Liabilities and Stockholder’s equity

Accounts payable

\)22,000

Reserve for income taxes

15,000

Customer’s account with credit balance

1

\(37,001

Deferred credit

Unamortized premium on bonds payable

2,000

Long term liabilities

Bonds payable

60,000

Total liabilities

99,001

Common stock

Common stock at par \)5

85,000

Earned surplus

24,999

Cash Dividend declared

8,000

117,999

Total liabilities and Stockholder’s equity

$217,000

Instructions

Evaluate the balance sheet presented. State briefly the proper treatment of any item criticized

Included in Outkast Company’s December 31, 2017, trial balance are the following accounts: Prepaid Rent \(5,200, Debt Investments (to be held to maturity until 2020) \)56,000, Unearned Fees \(17,000, Land (held for investment) \)39,000, and Notes Receivable (long-term) $42,000. Prepare the long-term investments section of the balance sheet.

What are some of the techniques of disclosure for the balance sheet?
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