Acct 551 Week 1

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Week 1 E12-1 a) Indicate which items on the list above would generally be reported as intangible assets in the balance sheet b) Indicate how, if at all, the items not reportable as intangible assets would be reported in the financial statements. 1. Investment in a subsidiary company. Intangible asset 2. Timberland. Intangible on balance sheet 3. Cost of engineering activity required to advance the design of a product to the manufacturing stage. Expensed to R&D. 4. Lease prepayment (6 months’ rent paid in advance). Current Asset on balance sheet 5. Cost of equipment obtained. Property, Plant and Equipment 6. Cost of searching for applications of new research findings. Expensed to R&D. 7. Costs incurred in the formation of a corporation. Expense 8. Operating losses incurred in the start-up of a business. Operating Loss 9. Training costs incurred in start-up of new operation. Expense 10. Purchase cost of a franchise. Intangible asset 11. Goodwill generated internally. Not Recorded 12. Cost of testing in search for product alternatives. R&D 13. Goodwill acquired in the purchase of a business. Intangible Asset 14. Cost of developing a patent. R&D 15. Cost of purchasing a patent from an inventor. Intangible Asset 16. Legal costs incurred in securing a patent. Intangible Asset 17. Unrecovered costs of a successful legal suit to protect the patent. Intangible Asset 18. Cost of conceptual formulation of possible product alternatives. Expensed to R&D 19. Cost of purchasing a copyright. Intangible Asset 20. Research and development costs. Expensed to R&D 21. Long-term receivables. Accounts Receivable 22. Cost of developing a trademark. Expense 23. Cost of purchasing a trademark. Intangible Asset

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