Kieso accounting principles 10e solution manual

If you continue browsing the site, you agree to the use of cookies on this website. See our User Agreement and Privacy Policy. See our Privacy Policy and User Agreement for details. Create your free account to read unlimited documents. The SlideShare family just got bigger. Home Explore Login Signup. Successfully reported this slideshow.

We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime. Next SlideShares. You are reading a preview. Create your free account to continue reading. Sign Up. Upcoming SlideShare. What to Upload to SlideShare. Embed Size px. Start on. Show related SlideShares at end.

WordPress Shortcode. Share Email. Top clipped slide. Download Now Download Download to read offline. Ch12 kieso intermediate accounting solution manual Nov. Mohamed Ebrahim Dwidar Follow. Ch24 kieso intermediate accounting solution manual. Ch23 kieso intermediate accounting solution manual. Ch22 kieso intermediate accounting solution manual. Ch21 kieso intermediate accounting solution manual. Ch20 kieso intermediate accounting solution manual.

Ch19 kieso intermediate accounting solution manual. Ch18 kieso intermediate accounting solution manual. Ch17 kieso intermediate accounting solution manual. Ch16 kieso intermediate accounting solution manual. Ch15 kieso intermediate accounting solution manual. Related Books Free with a 30 day trial from Scribd. Dry: A Memoir Augusten Burroughs. Related Audiobooks Free with a 30 day trial from Scribd. Ch12 kieso intermediate accounting solution manual 1.

Intangible assets; concepts, definitions; items comprising intangible assets. Patents; franchise; organization costs; trade name. Impairment of intangibles. Research and development costs and similar costs. Describe the characteristics of intangible assets. Identify the costs to include in the initial valuation of intangible assets.

Explain the procedure for amortizing intangible assets. Describe the types of intangible assets. Explain the accounting issues for recording goodwill. Explain the accounting issues related to intangible-asset impairments.

Identify the conceptual issues related to research and development costs. Describe the accounting for research and development and similar costs. Indicate the presentation of intangible assets and related items. Moderate 15—20 E Classification issues—intangibles.

Simple 10—15 E Classification issues—intangible asset. Moderate 10—15 E Intangible amortization. Moderate 15—20 E Correct intangible asset account.

Moderate 15—20 E Recording and amortization of intangibles. Simple 15—20 E Accounting for trade name. Simple 10—15 E Accounting for organization costs. Moderate 15—20 E Accounting for patents. Moderate 20—25 E Accounting for patents. Moderate 15—20 E Accounting for goodwill. Moderate 20—25 E Accounting for goodwill. Simple 10—15 E Copyright impairment. Simple 15—20 E Goodwill impairment.

Moderate 10—15 P Correct intangible asset account. Moderate 15—20 P Accounting for patents. Moderate 20—30 P Accounting for franchise, patents, and trade name. Moderate 15—20 P Goodwill, impairment. Complex 25—30 P Comprehensive intangible assets. Moderate 30—35 CA Accounting for pre-opening costs. Moderate 20—25 CA Accounting for patents. Moderate 25—30 CA Accounting for research and development costs. Moderate 20—25 4. The term intangible assets is used to refer to intangible assets other than goodwill.

For ease of reference, this term also includes the immediate charge recognized by not-for-profit entities in accordance with paragraph Development is the translation of research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or use.

It includes the conceptual formulation, design, and testing of product alternatives, construction of prototypes, and operation of pilot plants. Planned principal operations have not commenced. Planned principal operations have commenced, but there has been no significant revenue therefrom. An intangible assetwith a finite useful life shall be amortized; an intangible assetwith an indefinite useful life shall not be amortized. The useful life is not the period of time that it would take that entity to internally develop an intangible asset that would provide similar benefits.

However, a reacquired right recognized as an intangible asset is amortized over the remaining contractual period of the contract in which the right was granted. If an entity subsequently reissues sells a reacquired right to a third party, the entity includes the related unamortized asset, if any, in determining the gain or loss on the reissuance. The expected use of the asset by the entity.

The expected useful life of another asset or a group of assets to which the useful life of the intangible asset may relate. Any legal, regulatory, or contractual provisions that may limit the useful life. The cash flows and useful lives of intangible assets that are based on legal rights are constrained by the duration of those legal rights. Thus, the useful lives of such intangible assets cannot extend beyond the length of their legal rights and may be shorter.

In the absence of that experience, the entity shall consider the assumptions that market participants would use about renewal or extension consistent with the highest and best use of the asset by market participants, adjusted for entity-specific factors in this paragraph.

The effects of obsolescence, demand, competition, and other economic factors such as the stability of the industry, known technological advances, legislative action that results in an uncertain or changing regulatory environment, and expected changes in distribution channels. The level of maintenance expenditures required to obtain the expected future cash flows from the asset for example, a material level of required maintenance in relation to the carrying amount of the asset may suggest a very limited useful life.

As in determining the useful life of depreciable tangible assets, regular maintenance may be assumed but enhancements may not. Further, if an income approach is used to measure the fair value of an intangible asset, in determining the useful life of the intangible asset for amortization purposes, an entity shall consider the period of expected cash flows used to measure the fair value of the intangible asset adjusted as appropriate for the entity-specific factors in this paragraph.

The term indefinite does not mean the same as infinite or indeterminate. The useful life of an intangible asset is indefinite if that life extends beyond the foreseeable horizon—that is, there is no foreseeable limit on the period of time over which it is expected to contribute to the cashflows of the reporting entity. Such intangible assets might be airport route authorities, certain trademarks, and taxicab medallions. CE According the FASB ASC Disclosure shall be made in the financial statements of the total research and development costs charged to expense in each period for which an income statement is presented.

Such disclosure shall include research and development costs incurred for a computer software product to be sold, leased, or otherwise marketed. An entity shall charge the costs of overall deals that cannot be identified with specific projects to expenses as they are incurred over the related time period.

That is, expense as incurred. The two main characteristics of intangible assets are: a they lack physical substance. If intangibles are acquired for stock, the cost of the intangible is the fair value of the consideration given or the fair value of the consideration received, whichever is more clearly evident.

Limited-life intangibles should be amortized by systematic charges to expense over their useful life. An intangible asset with an indefinite life is not amortized. When intangibles are created internally, it is often difficult to determine the validity of any future service potential.

To permit deferral of these types of costs would lead to a great deal of subject- tivity because management could argue that almost any expense could be capitalized on the basis that it will increase future benefits. The cost of purchased intangibles, however, is capitalized because its cost can be objectively verified and reflects its fair value at the date of acquisition.

Companies cannot capitalize self-developed, self-maintained, or self-created goodwill. These expen- ditures would most likely be reported as selling expenses. Factors to be considered in determining useful life are: a The expected use of the asset by the entity.

The amount of amortization expensed for a limited-life intangible asset should reflect the pattern in which the asset is consumed or used up, if that pattern can be reliably determined. If the pattern of production or consumption cannot be determined, the straight-line method of amortization should be used. This trademark is an indefinite life intangible and, therefore, should not be amortized. Amortization Expense Artistic-related intangible assets involve ownership rights to plays, pictures, photographs, and video and audiovisual material.

These ownership rights are protected by copyrights. Contract-related intangible assets represent the value of rights that arise from contractual arrangements. Examples are franchise and licensing agreements, construction permits, broadcast rights, and service or supply contracts. Varying approaches are used to define goodwill. They are a Goodwill should be measured initially as the excess of the fair value of the acquisition cost over the fair value of the net assets acquired.

This definition is a measurement definition but does not conceptually define goodwill. Examples of elements of goodwill include new channels of distribution, synergies of combining sales forces, and a superior management team. Another definition is the capitalized value of the excess of estimated future profits of a business over the rate of return on capital considered normal in the industry.

A bargain purchase or negative goodwill occurs when the fair value of the assets purchased is higher than the cost. This situation may develop from a market imperfection. In this case, the seller would have been better off to sell the assets individually than in total. However, situations do occur e. Goodwill is recorded only when it is acquired by purchase.

Goodwill acquired in a business combination is considered to have an indefinite life and therefore should not be amortized, but should be tested for impairment on at least an annual basis. Many analysts believe that the value of goodwill is so subjective that it should not be given the same status as other types of assets such as cash, receivables, inventory, etc.

The analysts are simply stating that they believe that presentation of goodwill on the balance sheet does not provide any useful information to the users of financial statements.

Whether this is true or not is a difficult point to prove, but it should be noted that it appears contradictory to pay for the goodwill and then immediately write it off, denying that it has any value. Accounting standards require that if events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, then the carrying amount of the asset should be assessed.

The assessment or review takes the form of a recoverability test that compares the sum of the expected future cash flows from the asset undiscounted to the carrying amount. If the cash flows are less than the carrying amount, the asset has been impaired. The impairment loss is measured as the amount by which the carrying amount exceeds the fair value of the asset.

The fair value of assets is measured by their fair value if an active market for them exists. If no market price is available, the present value of the expected future net cash flows from the asset may be used.

Under U. GAAP, impairment losses on assets held for use may not be restored. Impairment losses and recovery of losses for assets to be disposed of are similar to other costs that would flow through operations.

Thus, gains recoveries of losses on assets to be disposed of should be reported as part of income from continuing operations. Research and development costs are incurred to develop new products or processes, to improve present products, or to discover new knowledge.

If the items have alternative future uses, the materials should be recorded as inventories and allocated as consumed and the equipment should be capitalized and depreciated as used. Also, see Illustration page Each of these items should be charged to current operations. Advertising costs have some minor exceptions to this general rule. However, the specific accounting is beyond the scope of this textbook. These costs are referred to as start-up costs, or more specifically organizational costs in this case.

The accounting for start-up costs is straightforward—expense these costs as incurred. The profession recognizes that these costs are incurred with the expectation that future revenues will occur or increased efficiencies will result. However, to determine the amount and timing of future benefits is so difficult that a conservative approach—expensing these costs as incurred—is required. There are 30 40 — 10 remaining years for amortization purposes.

No entry is necessary. The loss is the difference between the recorded goodwill and the implied goodwill. Becausethe usefullife is indefinite, copyrightNo.

Long-term investments in the balancesheet. Property,plant,and equipmentin the balance sheet. Researchand developmentexpense in the income statement. Currentasset prepaidrent in the balance sheet. Charge asexpensein the income statement. Operatinglosses in the income statement. Not recorded; any costs relatedto creating goodwillincurred internally mustbe expensed. Long-term investments,or other assets,in the balance sheet.

A title. A left or debit side. A right or credit side. Emphasize that a T-account is used frequently in the classroom because it can be constructed quickly and it contains the three major parts of an account. Debits and Credits. The terms debit and credit are directional signals: Debit indicates left, and credit indicates right.

Emphasize that the normal balance of an account is the same as the increase side. Assets, drawings, and expenses are increased by debits and decreased by credits. Steps in the Recording Process. There are three basic steps in the recording process: 1. Analyze each transaction for its effects on the accounts. Entering transaction data in the general journal is called journalizing. The general journal: 1.

Discloses in one place the complete effects of a transaction. Provides a chronological record of transactions. Helps to prevent or locate errors because the debit and credit amounts for each entry can be easily compared. A simple journal entry involves only two accounts one debit and one credit whereas a compound journal entry involves three or more accounts.

The Ledger. The ledger is the entire group of accounts maintained by a company. The ledger provides information about changes in specific account balances for a company. Companies arrange the ledger in the sequence in which they present the accounts in the financial statements, beginning with the balance sheet accounts.

He had a blue binder ledger book for each store. Why did Sam Walton keep separate pigeonholes and blue binders? Why bother to keep separate records for each store? See last page of chapter 2 in text for answer. Answer: Using separate pigeonholes and blue binders for each store enabled Walton to accumulate and track the performance of each individual store easily. Keeping separate records for each store provided Walton with more information about performance of individual stores and managers, and greater control.

Walton would want and need the same advantages if he were starting his business today. The difference is that he might now use a computerized system for small businesses. Posting is transferring journal entries to the ledger accounts. Posting involves the following steps:. In the ledger, in the appropriate columns of the account s debited, enter the date, journal page, and debit amount shown in the journal.

In the ledger, in the appropriate columns of the account s credited, enter the date, journal page, and credit amount shown in the journal. In the reference column of the journal, write the account number to which the credit amount was posted. A chart of accounts lists the accounts and the account numbers that identify their location in the ledger.

Accounts are usually numbered starting with the balance sheet accounts followed by income statement accounts. Trial Balance. A trial balance is a list of accounts and their balances at a given time. It proves the mathematical equity of debits and credits after posting. It may also uncover errors in journalizing and posting.

It is useful the preparation of financial statements. The financial records of Waste Management Company were in such disarray that 10, employees were receiving pay slips that were in error. In order for these companies to prepare and issue financial statements their accounting equations must have been in balance at year-end. How could these errors or misstatements have occurred? Audits of financial statements uncover some, but not all, errors or misstatements.

Thus, the material in Chapter 2 dealing with the account, general rules of debit and credit, and steps in the recording process—the journal, ledger, and chart of accounts—is the same under both GAAP and IFRS.

Transaction analysis is the same under IFRS and GAAP but, as you will see in later chapters, different standards sometimes impact how transactions are recorded. Rules for accounting for specific events, sometimes differ across countries. For example, European companies rely less on historical cost and more on fair value than U.

Despite the differences, the double-entry accounting system is the basis of accounting systems worldwide. Both the IASB and FASB go beyond the basic definitions provided in this textbook for the key elements of financial statements, that is, assets, liabilities, equity, revenues, and expenses. As shown in the textbook, dollars signs are typically used only in the trial balance and the financial statements.