INTERMEDIATE ACCT.-MYLAB COMBO ACCESS
3rd Edition
ISBN: 9780137391707
Author: GORDON
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 12.4P
a.
To determine
To conduct: An impairment test for the assets.
b.
To determine
To prepare:
c.
To determine
To compute: The amount of revised
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
I needed help with B C and D Impairment entry should it be 6,000?
Computing Impairment of Intangible Assets
Stiller Company had the following information for its three intangible assets.
1. Patent: A patent was purchased for $140,000 on June 30 of Year 1; Stiller estimated the useful life of the patent to be 15 years. On December 31 of Year 3, the estimated future cash flows attributed to the pat
were $119,000. The fair value of the patent was $105,000.
2. Trademark: A trademark was purchased for $7,000 on August 31 of Year 2. The trademark is considered to have an indefinite life. The fair value of the trademark on December 31 of Year 3 is $3,500.
3. Goodwill: Stiller recorded goodwill in January of Year 2, related to a purchase of another company. The carrying value of goodwill is $42,000 on December 31 of Year 3. On December 31 of Year 3, the segment
for which the goodwill relates had a fair value of $812,000. The book value of the net assets of the segment (including goodwill) is $840,000.
a. Classify each of the intangible assets above as a…
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…
Chapter 12 Solutions
INTERMEDIATE ACCT.-MYLAB COMBO ACCESS
Ch. 12 - Prob. 12.1QCh. 12 - Can firms group all property, plant, and equipment...Ch. 12 - Prob. 12.3QCh. 12 - Prob. 12.4QCh. 12 - Do firms follow the same steps for impairment...Ch. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Under IFRS, if a firm recovers an impairment loss...Ch. 12 - Under IFRS, when do firms test plant assets and...
Ch. 12 - Prob. 12.11QCh. 12 - Prob. 12.12QCh. 12 - Prob. 12.1MCCh. 12 - Prob. 12.2MCCh. 12 - Prob. 12.3MCCh. 12 - Prob. 12.4MCCh. 12 - Prob. 12.5MCCh. 12 - Prob. 12.6MCCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Prob. 12.3BECh. 12 - Prob. 12.4BECh. 12 - Indefinite-Life Intangible Asset Impairment....Ch. 12 - Prob. 12.6BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Prob. 12.11BECh. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Prob. 12.14BECh. 12 - Prob. 12.15BECh. 12 - Prob. 12.16BECh. 12 - Prob. 12.17BECh. 12 - Prob. 12.18BECh. 12 - Prob. 12.19BECh. 12 - Prob. 12.20BECh. 12 - Prob. 12.21BECh. 12 - Prob. 12.22BECh. 12 - Prob. 12.23BECh. 12 - Tangible Asset Impairment. Henne Optical...Ch. 12 - Tangible Asset Impairment Loss. Use the same...Ch. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Tangible Asset Impairment Loss, IFRS. Use the same...Ch. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - Assets Held for Disposal. Hattie Corporation...Ch. 12 - Prob. 12.11ECh. 12 - Asset Revaluation, Downwards, IFRS. Lousa Company...Ch. 12 - Tangible Asset Impairment. Chrispian Cookies, Inc....Ch. 12 - Prob. 12.2PCh. 12 - Tangible Asset Impairment. Using the same...Ch. 12 - Prob. 12.4PCh. 12 - Goodwill Impairment, Tangible Fixed Assets, and...Ch. 12 - Tangible Asset Impairment, Potential Reversal,...Ch. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Comprehensive Asset Revaluation Problem (Initial...Ch. 12 - Prob. 12.11PCh. 12 - Judgment Case 1: Impairments of PPE under IFRS...Ch. 12 - Prob. 2JCCh. 12 - Prob. 3JCCh. 12 - Financial Statement Analysis Case 1: Long-Lived...Ch. 12 - Surfing the Standards Case 1: Impairments of PPE...Ch. 12 - Prob. 2SSCCh. 12 - Prob. 1BCCCh. 12 - Basis for Conclusions Case 2: Intangible Assets ...Ch. 12 - Basis for Conclusions Case 3: Goodwill Impairment...
Knowledge Booster
Similar questions
- Pharoah Company, organized in 2022, has the following transactions related to intangible assets. 1/2/22 Purchased patent (7-year life) $605,500 4/1/22 Goodwill purchased (indefinite life) 360,000 7/1/22 Acquired 10-year franchise; expiration date 7/1/2032 600,000 9/1/22 Incurred research and development costs 182,000 (a1) Prepare the necessary entries to record these transactions. All costs incurred were for cash. Make the adjusting entries as of December 31, 2022, recording any necessary amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Creditarrow_forwardDepletion, patent amortization, goodwill impairment Data related to the acquisition of timber rights and intangible assets of Gemini Company during the current year ended December 31 are as follows: On December 31, Gemini Company determined that $3,000,000 of goodwill was impaired. Governmental and legal costs of $920,000 were incurred by Gemini Company on June 30 in obtaining a patent with an estimated economic life of eight years. Amortization is to be for one-half year. Timber rights on a tract of land were purchased for $1,350,000 on March 6. The stand of timber is estimated at 15,000,000 board feet. During the current year, 3,300,000 board feet of timber were cut and sold. Indicate the effects on the liquidity metric free cash flow and profitability metric asset turnover for each of the following: LiquidityFree Cash Flow ProfitabilityAsset Turnover 1. Impaired goodwill (Higher, lower or no effect) (Higher, lower or no effect) 2. Patent amortization (Higher, lower or no…arrow_forwardExplain both in detailarrow_forward
- Determining Carrying Value and Amortization of Intangible Assets Review the following information pertaining to Denzel Company. 1. A patent was purchased on January 2 of Year 1 for $104,000 when the remaining legal life was 16 years. On January 2 of Year 3, Denzel determined that the remaining useful life of the patent was only eight years from the date of its acquisition. 2. On January 1 of Year 3, Denzel Company purchased a second patent for $128,000 cash. At January 1 of Year 3, a total of 6 years of the patent's legal life of 20 years had expired. 3. On June 30 of Year 3, Denzel Company paid a firm $12,800 for a new trademark. Denzel considers the life of the trademark to be indefinite. 4. On November 1 of Year 3, Denzel Company acquired all noncash assets and assumed all liabilities of Lee Company at a cash purchase price of $192,000. Denzel determined that the fair value of the identifiable net assets acquired in the transaction is $187,200. Required a. What is the carrying value…arrow_forwardPronghorn Company, organized in 2020, has the following transactions related to intangible assets. 1/2/22 Purchased patent (8-year life) $592,000 4/1/22 Purchased a small compaly and as a result recorded goodwill. (indefinite life) 360,000 7/1/22 Acquired 13-year franchise; expiration date 7/1/2032 520,000 9/1/22 Incurred research and development costs 178,000 1. Prepare the necessary entries to record these intangibles. All costs incurred were for cash. Make the adjusting entries as of December 31, 2022, recording any necessary amortization. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) 2. Calculate ending balances as at 12/31/22. Ending balances Patents $enter a dollar amount…arrow_forwardAmortization and depletion entries Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows: a. On December 31, the company determined that $930,000 of goodwill was impaired. b. Governmental and legal costs of $6,720,000 were incurred on September 30 in obtaining a patent with an estimated economic life of 15 years. Amortization is to be for one-fourth of a year. c. Timber rights on a tract of land were purchased for $800,000 on February 4. The stand of timber is estimated at 5,000,000 board feet. During the current year, 1,400,000 board feet of timber were cut and sold. Required: 1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. Do not round your intermediate calculation. Impairment, Amortization or Depletion Expense Item a. b. C. 2. Journalize the adjusting entries to record the amortization, depletion, or impairment for each item. If an…arrow_forward
- During 2021, ABC Co. purchased intangible assets and debited them all to "Intangible assets". $250,000 $66,000 $50,000 1-Jan Patent 7-Year Life 1-Jun Goodwill Indefinite Life 1-Oct Research and development costs (a). Prepare a journal entry to reclassify them to an intangible asset account and/or expense account. (b). Prepare a journal entry to record amortization expense as of December 31, 2021.arrow_forwardAmortization and Depletion Entries Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows: On December 31, the company determined that $1,030,000 of goodwill was impaired. Governmental and legal costs of $12,960,000 were incurred on September 30 in obtaining a patent with an estimated economic life of 15 years. Amortization is to be for one-fourth of a year. Timber rights on a tract of land were purchased for $1,560,000 on February 4. The stand of timber is estimated at 6,500,000 board feet. During the current year, 1,800,000 board feet of timber were cut and sold. Required: 1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. Do not round your intermediate calculation. Item Impairment, Amortization or Depletion Expense a. $fill in the blank 010092f4ffd4074_1 b. $fill in the blank 010092f4ffd4074_2 c. $fill in the blank…arrow_forwardThe following previously unreported intangible assets were acquired by a U.S. company in a business combination. Their beginning-of- current-year book values and allocation to reporting units are listed below. Trade names Distribution network Goodwill Trade names Distribution network Reporting Unit #1 Reporting Unit #2 $14,000 Both identifiable intangibles have a 5-year remaining life. Information for year-end impairment testing is as follows: Sum of Expected Sum of Expected Future Undiscounted Future Discounted Cash Flows Cash Flows 70,000 Select one: O a. $7,700 O b. $5,040 C. $9,240 d. $7,000 $11,200 56,000 $12,600 8,400 O Information for year-end goodwill impairment testing is as follows: Reporting Reporting Unit #1 Unit #2 Fair value Book value before year-end adjustments for identifiable intangible amortization and impairment charges $10,500 7,000 $47,600 49,000 $36,400 For consolidation eliminating entry (O), what amount will be reported as expense for identifiable intangibles…arrow_forward
- Determine whether there is any goodwill impairment and if so please calculate the goodwill impairment loss. On the date of acquisition, the following information is available: Fair Value of the reporting unit is $720,000 Fair Value of identifiable net assets $601,000 Goodwill $119,000 One year later at the first periodic review date the following information is available: Fair value of the reporting unit is $788,000 Carrying value of the reporting unit (includes goodwill) $889,000 Fair Value of identifiable net assets $766,000 $22,000arrow_forwardCenter Company acquired three intangible assets before 2020. 2020. Before that date, no formal financial statements had been prepared and the cost of intangible assets had been charged to Problem 32-11 (IAA) Cunter Company acquired three intangible assets before 2020. The entity is preparing financial statements on December 31, 0 Before that date, no formal financial statements had been appared and the cost of intangible assets had been charged to operations when acquired. The following intangible assets were accounted for in this manner. Acquisition date Useful life Cost Copyright 1 Copyright 2 Patent January 1,2016 20 400,000 360,000 500,000 July 1, 2017 15 January 1,2018 10 Required: 1. Prepare correcting entry to record the intangible asseta on January 1, 2020. 2. Prepare journal entry to record amortization of intangible assets for 2020.arrow_forwardFrancis-Toure (FT) Ltd adopts revaluation model for subsequent measurement of its intangible assets in accordance with IAS 38: Intangible assets. The policy of FT is to revalue its intangible asset at the end of each year. An intangible asset with an estimated useful life of 9 years was acquired on 1 January 2018 for GH¢45,000. It was revalued to GH¢54,400 on 31 December 2018 and the revaluation surplus was correctly recognized on that date. As at 31 December 2019, the asset was revalued at GH¢32,000. Discuss the accounting treatment required in 2018 and 2019 financial statements.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning