Roocky reports the following patents on its December 31, 2017 Statement of Financial Position Useful life at Initial Cost Acquisition Date acquisition date 1,224,000.00 March 1, 2014 450,000.00 July 1, 2015 A 17 10 C 432,000.00 September 1, 2016 4 The following events occurred during the yearended December 31, 2018. |1. Research and development costs of 737,100 were incurred during the year. These costs were incurred prior to projects achieving economic viability. 2. Patent D was purchased on July 1 for 855,000. It has a remaining life of 9.5 years. 3. A possible impairment of Patent B's value may have occurred at December 31, 2018. This i December 31, 2019 60,000.00 December 31, 2020 60,000.00 December 31, 2021 60,000.00 The appropriate discount rate to be used for these cash flows is 8% Questions: 1. What is the carrying value of Roocky's patents on December 31, 2017? 2. What amount of impairment loss should be reported by Roocky for the year ended December 31, 2018? 3. What is the carrying value of Roocky's patents on December 31, 2018?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Roocky reports the following patents on its December 31, 2017 Statement of Financial
Position
Useful life at
Initial Cost
Acquisition Date
acquisition date
A
1,224,000.00 March 1, 2014
17
B
450,000.00 July 1, 2015
10
432,000.00 September 1, 2016
4
The following events occurred during the yearended December 31, 2018.
|1. Research and development costs of 737,100 were incurred during the year. These costs
|were incurred prior to projects achieving economic viability.
|2. Patent D was purchased on July 1 for 855,000. It has a remaining life of 9.5 years.
3. A possible impairment of Patent B's value may have occurred at December 31, 2018. This is
December 31, 2019
60,000.00
December 31, 2020
60,000.00
December 31, 2021
60,000.00
|The appropriate discount rate to be used for these cash flows is 8%
Questions:
1. What is the carrying value of Roocky's patents on December 31, 2017?
2. What amount of impairment loss should be reported by Roocky for the year
ended December 31, 2018?
3. What is the carrying value of Roocky's patents on December 31, 2018?
Transcribed Image Text:Roocky reports the following patents on its December 31, 2017 Statement of Financial Position Useful life at Initial Cost Acquisition Date acquisition date A 1,224,000.00 March 1, 2014 17 B 450,000.00 July 1, 2015 10 432,000.00 September 1, 2016 4 The following events occurred during the yearended December 31, 2018. |1. Research and development costs of 737,100 were incurred during the year. These costs |were incurred prior to projects achieving economic viability. |2. Patent D was purchased on July 1 for 855,000. It has a remaining life of 9.5 years. 3. A possible impairment of Patent B's value may have occurred at December 31, 2018. This is December 31, 2019 60,000.00 December 31, 2020 60,000.00 December 31, 2021 60,000.00 |The appropriate discount rate to be used for these cash flows is 8% Questions: 1. What is the carrying value of Roocky's patents on December 31, 2017? 2. What amount of impairment loss should be reported by Roocky for the year ended December 31, 2018? 3. What is the carrying value of Roocky's patents on December 31, 2018?
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