Reference no: EM1356720
1.) On June 1, 2006, Janson Bottle Company sold $400,000 in long-term bonds for $351,040. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10%. The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effective-interest method.
Instructions
(a) Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each May 31. Include only the first four years. Make sure all columns and rows are properly labeled. (Round to the nearest dollar.)
(b) The sales price of $351,040 was determined from present value tables. Specifically explain how one would determine the price using present value tables.
2.) Mega Co. purchased a patent from Connor Co. for $180,000 on July 1, 2004. Expenditures of $51,000 for successful litigation in defense of the patent were paid on July 1, 2007. Mega estimates that the useful life of the patent will be 15 years from the date of acquisition.
(a) Prepare a computation of the carrying value of the patent at December 31, 2007.
(b) Explain the type of disclosure required for this patent in the financial statements. Explain your position on how adequate you feel the disclosure requirements are for intangible assets.
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: Janson Bottle Corporation sold $400,000 in long-term bonds for $351,040. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10 percent.
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