Intermediate Accounting 2
Week 1 homework
12-5 Research & Development Costs 940,000
Legal Costs 75,000
Prepaid Rent 26,000
Rent Expense 65,000
Discount on Bonds Payable 82,950
Interest Expense 1.050
Advertising Expense 207,000
Income Summary 141,000
Paid in Capital in Excess of par on Common Stock 250,000
Intangible Assets 1,288,000
12-15 (a.) ...view middle of the document...
) Once goodwill is written off, it cannot be written back up so no entry is necessary.
Interest on Mortgage Bonds: 2009 amount is due to normal construction and wasn’t impacted by the tornado. They knew it would accrue during the construction and add to the total cost of building the shopping center. The 2010 amount is also what would have normally accrued; there just wasn’t any income to offset it. IF the tornado hadn’t hit, it would have been a normal operating expense.
Cost of Obtaining Tenants: Both years are normal expenses that would have been incurred regardless of the tornado. These are considered a start-up cost that would get expensed when they are incurred.
Promotional Advertising- The 2009 costs were not affected by the tornado and should be expensed normally as they are incurred. The 2010 costs would probably be written off as a loss due to the unforeseeable natural disaster.