Question

Presented below is selected information for Cullumber Company. Answer the questions asked about each of the...

Presented below is selected information for Cullumber Company.

Answer the questions asked about each of the factual situations. (Do not leave any answer field blank. Enter 0 for amounts.)

(a) On January 1, 2017, Cullumber incurred organization costs of $265,000. What amount of organization expense should be reported in 2017?

Amount to be reported

$enter a dollar amount to be reported


(b) Cullumber bought a franchise from Oriole Co. on January 1, 2016, for $206,000. The carrying amount of the franchise on Oriole’s books on January 1, 2016, was $256,000. The franchise agreement had an estimated useful life of 10 years. Because Cullumber must enter a competitive bidding at the end of 2018, it is unlikely that the franchise will be retained beyond 2025. What amount should be amortized for the year ended December 31, 2017?

Amount to be amortized

$enter a dollar amount to be amortized


(c) Cullumber purchased a patent from Epp Co. for $420,000 on January 1, 2015. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2025. During 2017, Cullumber determined that the economic benefits of the patent would not last longer than 6 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2017?

Amount to be reported

$enter a dollar amount to be reported


(d) Cullumber purchased the license for distribution of a popular consumer product on January 1, 2017, for $74,000. It is expected that this product will generate cash flows for an indefinite period of time. The license has an initial term of 5 years but by paying a nominal fee, Cullumber can renew the license indefinitely for successive 5-year terms. What amount should be amortized for the year ended December 31, 2017?

Amount to be amortize

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