Patent and amortization

Discussion in 'Exams and Studying' started by 12Charlotte12, Mar 28, 2018.

  1. 12Charlotte12

    12Charlotte12

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    Could anyone help me?:(It is really confusing.

    Question below:

    1.png 2.png 3.png

    *Using direct method only


    My teacher said the answer to the 9th question is 71,000-58,000=13,000(Purchase of fixed assets), but the sold of the patent also should be considered into investing activities.The answer is still 13,000 because the amortization expense is 1,100 and the sold of the patent is the same as the amortization expense.

    so it supposed to be 71,000-58,000(purchase of fixed assets )-1,100(patent)+1,100 (amortization) = 13,000

    My teacher also said if we move the amortization expenses, it should be 71,000 - 58,000 -1,100.

    So now I have a question here.As I know, the amortization expenses supposed to show up only in Indirect method, so why we still take amortization into account?Is it because of the patent? Or once we see intangible assets on long-term assets, we have to consider adding or deducting the amortization expenses into investing activities?

    If it is really so, how about depreciation?Because the depreciation is same as the amortization, but depreciation is for equipment and only appear when we use the indirect method.Do we still need to consider it like amortization?


    Thank you for your time.

    I really appreciate it if you could help me.

     
    12Charlotte12, Mar 28, 2018
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  2. 12Charlotte12

    Drmdcpa VIP Member

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    Please note that if you are looking for assistance with an exam-style question, you must attempt the question yourself before asking for help. You can then state the answer you have so far and explain which aspect you need help with. Anyone posting exam-style questions expecting the answer to be given to them will have their posts removed. Repeat offenders will be banned from the forum.
     
    Drmdcpa, Mar 28, 2018
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  3. 12Charlotte12

    12Charlotte12

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    Hi can't you see what I have written? What I thought and the difficulty I met I think I have written clearly.
     
    12Charlotte12, Mar 28, 2018
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  4. 12Charlotte12

    Becky Administrator

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    I am satisfied that this topic falls within the forum rules :)
     
    Becky, Mar 29, 2018
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