Larkspur Golf Inc. was formed on July 1, 2024, when Matt Magilke purchased the Old Master Golf Company. Old Master providesvideo golf instruction at kiosks in shopping malls. Magilke plans to integrate the instructional business into his golf equipment andaccessory stores. Magilke paid $770,000 cash for Old Master. At the time, Old Master's balance sheet reported assets of$670,000 and liabilities of $210,000 (thus stockholders' equity was $460,000). The fair value of Old Master's assets is estimated to be$800,000. Included in the assets is the Old Master trade name with a fair value of $12,000 and a copyright on some instructionalbooks with a fair value of $43,200. The trade name has a remaining life of 5 years and can be renewed at nominal cost indefinitely. Thecopyright has a remaining life of 40 years. (c)At the end of 2026, Magilke is evaluating the results of the instructional business. Due to fierce competition from online andtelevision (e.g., the Golf Channel), the Old Master reporting unit has been losing money. The fair value of the Old Master reportingunit is $330,000. Magilke has collected the following information related to the company's intangible assets.Intangible AssetTrade namesCopyrightsExpected Cash Flows(undiscounted)$13,80046,000Fair Values$4,60041,000Prepare the journal entries required, if any, to record impairments on Larkspur intangible assets. Assume that any amortizationfor 2026 has been recorded and that the carrying value of the reporting unit is $410,000 (which reflects recognition of anyimpairments other than goodwill). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Ifno entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)Account Titles and ExplanationDebitCredit

Intangible assets are typically intellectual assets. Because of how intangible assets are…

Larkspur Golf Inc. was formed on July 1, 2024, when Matt Magilke purchased the Old Master Golf Company. Old Master provides video golf instruction at kiosks in shopping malls. Magilke plans to integrate the instructional business into his golf equipment and accessory stores. Magilke paid $770,000 cash for Old Master. At the time, Old Master's balance sheet reported assets of $670,000 and liabilities of $210,000 (thus stockholders' equity was $460,000). The fair value of Old Master's assets is estimated to be $800,000. Included in the assets is the Old Master trade name with a fair value of $12,000 and a copyright on some instructional books with a fair value of $43,200. The trade name has a remaining life of 5 years and can be renewed at nominal cost indefinitely. The copyright has a remaining life of 40 years.

Larkspur Golf Inc. was formed on July 1, 2024, when Matt Magilke purchased the Old Master Golf Company. Old Master provides video golf instruction at kiosks in shopping malls. Magilke plans to integrate the instructional business into his golf equipment and accessory stores. Magilke paid $770,000 cash for Old Master. At the time, Old Master's balance sheet reported assets of $670,000 and liabilities of $210,000 (thus stockholders' equity was $460,000). The fair value of Old Master's assets is estimated to be $800,000. Included in the assets is the Old Master trade name with a fair value of $12,000 and a copyright on some instructional books with a fair value of $43,200. The trade name has a remaining life of 5 years and can be renewed at nominal cost indefinitely. The copyright has a remaining life of 40 years.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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