Computing Impairment of Intangible AssetsStiller Company had the following information for its three intangible assets.1. Patent: A patent was purchased for $180,000 on June 30, 2018. Stiller estimated the useful life of the patent to be 15 years. On December 31, 2020, the estimated future cash flows attributed to the patent were $153,000. The fair value of the patentwas $135,000.2. Trademark: A trademark was purchased for $9,000 on August 31, 2019. The trademark is considered to have an indefinite life. The fair value of the trademark on December 31, 2020, is $4,500.3. Goodwill: Stiller recorded goodwill in January 2019, related to a purchase of another company. The carrying value of goodwill is $54,000 on December 31, 2020. On December 31, 2020, the segment for which the goodwill relates had a fair value of$1,044,000. The book value of the net assets of the segment (including goodwill) is $1,080,000.Note: Round each of your answers to the nearest whole dollar.a. Classify each of the intangible assets above as a finite life intangible or an indefinite life intangible.PatentFinite life intangibleTrademark Indefinite life intangibleGoodwillIndefinite life intangibleb. Determine the carrying value of each asset on December 31, 2020, prior to testing for impairment, assuming that the company uses the straight-line method to amortize intangible assets, and no impairment was reported prior to 2020.31, 2020, before impairment testingCarrying value of trademark, Dec. 31, 2020, before impairment testing $Carrying value of goodwill, Dec. 31, 2020, before impairment testingCarrying value of patent,$180,000 x9,000 v2$54,000c. Test each asset for impairment assuming that the qualitative assessment indicated that further impairment testing was warranted. Determine the carrying value of each asset on December 31, 2020, after impairment testing.Carrying value of patent, Dec. 31, 2020, after impairment testing$27,000 xCarrying value of trademark, Dec. 31, 2020, after impairment testing $4,500 vCarrying value of goodwill, Dec. 31, 2020, after impairment testing$18,000 v

Name: Computing Impairment of Intangible AssetsStiller Company had the foll
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Description: Computing Impairment of Intangible AssetsStiller Company had the following information for its three intangible assets.1. Patent: A patent was purchased for $180,000 on June 30, 2018. Stiller estimated the useful life of the patent to be 15 years. O

Step 1 Intangible assets are those assets which are not physical in character but its applications are those as existing other assets.Step 2 a B Formulation Computation C Formulation Computation

Business

Accounting

ote: Round each of your answers to the nearest whole dollar. Classify each of the intangible assets above as a finite life intangible or an indefinite life intangible. atent rademark Indefinite life intangible : v oodwill Indefinite life intangible : v Finite life intangible Determine the carrying value of each asset on December 31, 2020, prior to testing for impairment, assuming that the company uses the straight-line method to amortize intangible assets, and no impairment was reported prior to 2020. arrying value of patent, Dec. 31, 2020, before impairment testing arrying value of trademark, Dec. 31, 2020, before impairment testing s arrying value of goodwill, Dec. 31, 2020, before impairment testing s 180,000 x 9,000 v 54,000 v Test each asset for impairment assuming that the qualitative assessment indicated that further impairment testing was warranted. Determine the carrying value of each asset on December 31, 2020, after impairment testing. arrying value of patent, Dec. 31, 2020, after impairment testing 27,000 x arrying value of trademark, Dec. 31, 2020, after impairment testing s 4.500 arrying value of goodwill, Dec. 31, 2020, after impairment testing s 18,000 v

ote: Round each of your answers to the nearest whole dollar. Classify each of the intangible assets above as a finite life intangible or an indefinite life intangible. atent rademark Indefinite life intangible : v oodwill Indefinite life intangible : v Finite life intangible Determine the carrying value of each asset on December 31, 2020, prior to testing for impairment, assuming that the company uses the straight-line method to amortize intangible assets, and no impairment was reported prior to 2020. arrying value of patent, Dec. 31, 2020, before impairment testing arrying value of trademark, Dec. 31, 2020, before impairment testing s arrying value of goodwill, Dec. 31, 2020, before impairment testing s 180,000 x 9,000 v 54,000 v Test each asset for impairment assuming that the qualitative assessment indicated that further impairment testing was warranted. Determine the carrying value of each asset on December 31, 2020, after impairment testing. arrying value of patent, Dec. 31, 2020, after impairment testing 27,000 x arrying value of trademark, Dec. 31, 2020, after impairment testing s 4.500 arrying value of goodwill, Dec. 31, 2020, after impairment testing s 18,000 v

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

Computing Impairment of Intangible Assets
Stiller Company had the following information for its three intangible assets.
1. Patent: A patent was purchased for $180,000 on June 30, 2018. Stiller estimated the useful life of the patent to be 15 years. On December 31, 2020, the estimated future cash flows attributed to the patent were $153,000. The fair value of the patent
was $135,000.
2. Trademark: A trademark was purchased for $9,000 on August 31, 2019. The trademark is considered to have an indefinite life. The fair value of the trademark on December 31, 2020, is $4,500.
3. Goodwill: Stiller recorded goodwill in January 2019, related to a purchase of another company. The carrying value of goodwill is $54,000 on December 31, 2020. On December 31, 2020, the segment for which the goodwill relates had a fair value of
$1,044,000. The book value of the net assets of the segment (including goodwill) is $1,080,000.
Note: Round each of your answers to the nearest whole dollar.
a. Classify each of the intangible assets above as a finite life intangible or an indefinite life intangible.
Patent
Finite life intangible
Trademark Indefinite life intangible
Goodwill
Indefinite life intangible
b. Determine the carrying value of each asset on December 31, 2020, prior to testing for impairment, assuming that the company uses the straight-line method to amortize intangible assets, and no impairment was reported prior to 2020.
31, 2020, before impairment testing
Carrying value of trademark, Dec. 31, 2020, before impairment testing $
Carrying value of goodwill, Dec. 31, 2020, before impairment testing
Carrying value of patent,
$
180,000 x
9,000 v
2$
54,000
c. Test each asset for impairment assuming that the qualitative assessment indicated that further impairment testing was warranted. Determine the carrying value of each asset on December 31, 2020, after impairment testing.
Carrying value of patent, Dec. 31, 2020, after impairment testing
$
27,000 x
Carrying value of trademark, Dec. 31, 2020, after impairment testing $
4,500 v
Carrying value of goodwill, Dec. 31, 2020, after impairment testing
$
18,000 v

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Use the following information to answer the next two questions. Franco Company uses IFRS and owns property, plant and equipment with a historical cost of 5,000,000 euros. At December 31, 2019, the company reported a valuation reserve of 8,565,000 euros. At December 31, 2020, the property, plant and equipment was appraised at 5,525,000 euros. 18) The property, plant and equipment will be reported on the December 31, 2020 statement of financial position at a) 5,000,000 euros. b) 5,525,000 euros. c) 8,565,000 euros. d) 9,090,000 euros 19) The valuation reserve at December 31, 2020 will be reported at a) 8,040,000 euros on the Statement of Stockholders' Equity. b) 8,565,000 euros in the Assets section of the Statement of Financial Position c) 9,090,000 euros in the equity section of the Statement of Financial Position. d) 525,000 euros on the Income Statement.