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.) 335,000,000 Fair Value -160,000,000 net identifiable assets 175,000,000 impaired value of Goodwill

200,000,000 Carrying amount of Goodwill -175,000,000 Impaired value of Goodwill 25,000,000 Loss on Impairment

Loss on Impairment 25,000,000 Goodwill 25,000,000

(b.) Once goodwill is written off, it cannot be written back up so no entry is necessary.

CA12-2
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