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1)Assume that X incurs $180,000 in legal costs on March 1, 2017, to successfully defend a patent

Accounting

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1)Assume that X incurs $180,000 in legal costs on March 1, 2017, to successfully defend a patent. The patent’s useful life is 12 years, amortized on a straight-line basis. The adjusting entry on December 31, 2017 is ------

Select one:

a. Dr. Amortization expense $12,500 and Cr. Patent or Accumulated Amortization $12,500.

b. Dr. Depreciation expense $16,000 and Cr. Patent or Accumulated Amortization $16,000.

c. Dr. Depreciation expense $180,000 and Cr. Patent or Accumulated Amortization $180,000.

d. Dr. Depreciation expense $120,000 and Cr. Patent or Accumulated Amortization $120,000.

Clear my choice

Amortization of a premium increases bond interest expense, while amortization of a discount decreases bond interest expense.

Select one:

a. True.

b. False.

2)On January 1, 2020 X company borrowed 3-year $10,000, 10% interest bearing notes from Arab bank. The interest is payable on December 31. The market interest rate is 0.12. the cash will be received from Arab Bank is ----------------

Select one:

a. $9,000.

b. $10,000.

c. $9,520.

d. $11,000.

Clear my choice

Partial depreciation is used when the company purchase asset at the beginning of fiscal year.

Select one:

a. False

b. True