At the beginning of 2019, Metatec Inc. acquired Ellison Technology Corporation for $580 million. In addition to cash, receivables, and inventory, the following assets and their fair values were also acquired: $148 million 38 million Plant and equipment (depreciable assets) Patent Goodwill 100 million The plant and equipment are depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The patent is estimated to have a 5-year useful life, no residual value, and is amortized using the straight-line method. At the end of 2021, a change in business climate indicated to management that the assets of Ellison might be impaired. The following amounts have been determined:

At the beginning of 2019, Metatec Inc. acquired Ellison Technology Corporation for $580 million. In addition to cash, receivables, and inventory, the following assets and their fair values were also acquired: $148 million 38 million Plant and equipment (depreciable assets) Patent Goodwill 100 million The plant and equipment are depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The patent is estimated to have a 5-year useful life, no residual value, and is amortized using the straight-line method. At the end of 2021, a change in business climate indicated to management that the assets of Ellison might be impaired. The following amounts have been determined:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

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At the beginning of 2019, Metatec Inc. acquired Ellison Technology Corporation for $580 million. In addition to cash, receivables, and
inventory, the following assets and their fair values were also acquired:
$148 million
38 million
Plant and equipment (depreciable assets)
Patent
Goodwill
100 million
The plant and equipment are depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The
patent is estimated to have a 5-year useful life, no residual value, and is amortized using the straight-line method.
At the end of 2021, a change in business climate indicated to management that the assets of Ellison might be impaired. The following
amounts have been determined:

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Step 1: Computation of book value of plant and equipment

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Step 3: Determining Impairment loss on Plant & Equipment

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