# Xenon Tech acquired a patent on January 1st, 2013, for \$26,400. The patent was estimated to have a useful life of 12 years. On July 1st, 2017, the company incurred legal fees of \$6,000 to successfully defend the patent in an infringement suit. How much amortization expense will Xenon Tech recognize on the Income Statement for the year ended December 31st, 2017?

The amount that will recognize under amortization expenses is \$2600.

Explanation:

The first step here would be to calculate the amortization expenses for the first 4 years of the patent, here will use straight line depreciation method,

Formula - original value of asset / useful life in years

- \$26,400 / 12

- \$2200

Now for the 4 years this amount would become \$2200 x 4 = \$8800

The amount of amortization for the first half of 2017 ( up to 30 June ) would be-

= half of full year expenses

= \$2200 / 2

= \$1100

So up to 30 June 2017, the expenses are \$9900 ( \$8800+\$1100), So the new book value would be = \$26,400 - \$9900

= \$16,500

In this \$16,500 we will add the amount of legal fees, so the total would be -

\$16,500 + \$6000

= \$22,500

The next step is to divide this value by remaining useful; years which is 7.5,

\$22,500 / 7.5

= \$3000

Now we will divide this amount by 2 because we have to take out expense for remaining last 6 months of 2017

\$3000 / 2

= \$1500

Adding the expenses for first and second half of 2017 to take out total amortization expense of 2017 -

\$1100 + \$1500

= \$2600

## Related Questions

How can strategic leaders be successful in an industry like the airlines industry

Strategic leaders can help any airline related issue to be solved

Explanation:

Strategic leaders are needed everywhere. An airline company would indeed benefit from a strategic leader and or manager

9) Selected information regarding a company's most recent quarter follows (all data in thousands). 9) _______ Direct labor \$540 Beginning work in process inventory \$330 Ending work in process inventory \$420 Cost of goods manufactured \$1620 Manufacturing overhead \$830 What was the cost of direct materials used for the quarter

Direct material= \$340

Explanation:

Giving the following information:

Direct labor \$540

Beginning work in process inventory \$330

Ending work in process inventory \$420

Cost of goods manufactured \$1620

To calculate the direct material used in production, we need to use the following formula:

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

1,620= 330 + DM + 540 + 830 - 420

Direct material= \$340

Consider the pooling strategy Fg, Fb, where both types have fun. 1) If anticipating this strategy, what are the employer’s beliefs after the signal of F? That is, what is p(g|F)—you do not need to worry about their beliefs following education, since it is off-path. 2) What strategy should the employer choose in response to F? 3) Is Fg, Fb a best reply for both worker types if the employer plays this optimal strategy in response to F, and also hires following education (hE)? 4) What if the employer does not hire after education (∼hE)?

If I am a employer of fb,my strategy will be that I will hire machine learning engineer to solve automation problem,I will give them skills if employer don't hire after education.

Amazon.com, Inc., headquartered in Seattle, WA, started its electronic commerce business in 1995 and expanded rapidly. The following transactions occurred during a recent year (dollars in millions):1. Issued stock for \$623 cash (example).
2. Purchased equipment costing \$6,320, paying \$4,893 in cash and charging the rest on account.
3. Paid \$5,000 in principal and \$300 in interest expense on long-term debt.
4. Earned \$177,866 in sales revenue; collected \$123,949 in cash with the customers owing the rest on their Amazon credit card account.
5. Incurred \$25,249 in shipping expenses, all on credit.
6. Paid \$118,241 cash on accounts owed to suppliers.
7. Incurred \$10,069 in marketing expenses; paid cash.
8. Collected \$38,200 in cash from customers paying on their Amazon credit card account.
9. Borrowed \$16,231 in cash as long-term debt.
10. Used inventory costing \$111,934 when sold to customers.
11. Paid \$830 in income tax recorded as an expense in the prior year.

Required:

For each of the transactions, complete the tabulation, indicating the effect (positive value for increase, negative value for decrease, and leave blank if no effect) of each transaction.

This question is a test of understanding accounting principles and how various transactions impact a business's accounts. The student is required to analyze several transactions for Amazon.com, Inc., determining for each one how it affects the company's assets, liabilities, equity, revenue, and expenses.

### Explanation:

To respond to this question will require understanding of accounting and financial transactions and the resulting impacts on business accounts, in this case, Amazon.com, Inc. For example, when Amazon issued stock for \$623 cash, this increased cash (an asset) by \$623 million and equity by the same amount. Buying equipment costing \$6320 while paying \$4893 in cash and charging the rest on the account reduced cash by \$4893 and increased both equipment (another asset) by \$6320 and accounts payable (a liability) by \$1427 million (\$6320 - \$4893). Similarly, you can analyze other transactions: principal and interest payments on debt reduce cash and long-term debt or interest expense; generating sales revenue increases revenue and accounts receivable or cash; incurring expenses (e.g., shipping, marketing) increases expense and accounts payable or decreases cash; borrowing cash increases both cash and long-term debt, etc. Understanding the transactions in this way is central to the accounting process, which creates the financial statements that give stakeholders important information about a business's financial health.

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Consider a two-step mortgage for \$150,000, 30 years, monthly payments, an initial interest rate of 5%, a cap of 5%, and a single rate adjustment at the end of year 7. Assume that the index rate at the end of year 7 is 5% and the margin is 2%. If the borrower pays an extra \$100 with each payment starting in month 85, by how many months will he shorten the term of the loan

Consider the following calculations

Explanation:

This 2-step mortgage problem requires a 2-step solution.

To solve for the PMT for the last 23 years of the loan, we first need to know what the principal is at the end of the 7th year.

Thus, step I uses the initial info to solve for the PMT for each month of the first 7 years. N=360, I/Y=5(%)/12 = 0.416667(%), PV=150,000, => PMT = 805.

The discount rate will change to 5% index rate plus 2% margin = 7% at the beginning of the 8th year.

In Step II we first determine the remaining balance at the end of year 7. This requires using the amortization worksheet.

On the TI BA II Plus, AMORT is the secondary function of PV.

Set P1, the periods at which the calculations begin, equal to 1. We cursor down to P2, which is the last period of the calculation, and set it equal to 84. Cursoring down once again, we see that BAL at month 84 = 131,917.52.

Going back to the TVM row, we set PV remaining at the end of 23 years = 131,917.52. I/Y is calcluated as 5(%) index rate plus 2(%) margin =7%; dividing 7(%) by 12 = 0.583333(%).  N=360-84 = 276 months left.

Finally, we solve for PMT = 962.89.

Jordan (single, age 30), a real estate broker (self-employed), had the following income and expenses: Commission income

180,000

Medical insurance premium paid for his staff

10,000

Office staff salary expense

40,000

Medical insurance premium paid for himself

7,000

Office rental expense

30,000

Unreimbursed medical expenses paid for himself

5,000

Which of the following statement is correct?

A. Jordan will report \$93,000 as his business income (from Schedule C) and his AGI is \$88,000.
B. Jordan will report \$100,000 as his business income (from Schedule C) and his AGI is 93,000.
C. Jordan will report \$110,000 as his business income (from Schedule C) and his AGI is \$95,870.
D. Jordan will report \$100,000 as his business income (from Schedule C) and his AGI is \$80,935.
E. Jordan will report \$100,000 as his business income (from Schedule C) and his AGI is \$85,935.

Given:

Commission income  = \$180,000

Medical insurance =  \$10,000

Salary expense  = \$40,000

Medical insurance premium paid for himself  = \$7,000

Office rental expense  = \$30,000

Medical expenses paid for himself  = 5,000

Business income = Total revenue - Total expenses

Business income = \$180,000 - (\$10,000 - \$40,000 - \$30,000)

Business income = \$180,000 - \$80,000

Note: Self-incurred expenses are not included in business expenses.

Computation of AGI:

AGI = Business income - Deduction from schedule c

AGI = \$100,000 - Medical insurance premium paid for himself

AGI = \$100,000 - \$7,000

AGI = \$93,000

Therefore, option "B" is the correct answer to the following question.