Chapter 11, Problem 11.12P

(1)

To determine

Depreciation:

The decrease in the value of long term tangible assets due to its use is known as depreciation. It is the allocation of the cost of long term tangible assets over the useful life of the asset.

Intangibles assets:

The assets that are not physical in nature, and add value to the business in the future are referred to as intangible assets. For example, goodwill, patents, copyrights.

Impairment Loss:

It is the difference between the current book value of the long term asset and the fair market value of the asset as on the impairment.

To compute: The Book Value of the Plant and Equipment (P & E) and Patent at the end of 2016.

(2)

To determine

To explain: when should the plant and equipment and the patent be tested for impairment.

(3)

To determine

To explain: When should goodwill should be tested for impairment.

(4)

To determine

The amount of any impairment loss to be recorded, if any, for the three assets.