Financial Accounting
9th Edition
ISBN: 9781259222139
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Chapter 8, Problem 8.7AP
1.
To determine
Compute the amount of amortization that should be recorded for each intangible asset at the end of the annual accounting period, December 31, 2016.
2.
To determine
Give the book value of each intangible asset on January 1, 2019.
3.
To determine
Compute the amount of impairment loss to be recorded on January 1, 2019.
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Students have asked these similar questions
Danube, Toggle, and ConnectOn rely on various intangible assets to operate their businesses. These companies amortize the cost of these assets using the straight-line method over the following average estimated useful lives (in years), as reported in their 2015 annual reports.
Type of Intangible Asset
Danube
Toggle
ConnectOn
Developed Technology
3.5
10.0
2.5
Trade Names
2.3
4.6
1.2
Customer Relationships
2.1
6.2
3.1
Assume each company spent $840,000 at the beginning of the current year for additional Developed Technology. Because of its proprietary nature, the technology is estimated to have no residual value at the end of its estimated life.
Required:
Calculate the impact (direction and amount) that the amortization of such expenditures would have on each company’s Income from Operations in the current year.
ABC Co. has a division that is considered to be a cash-generating unit for purposes of IAS 36, impairment of assets. The
recoverable amount of this cash-generating unit is $130 000 at 31 December 2014.
The carrying amount of the cash-generating unit is $181 000 at 31 December 2014, constituted by the following individual
carrying amounts as at this date:
Goodwill (purchased goodwill):
20 000
Equipment (measured under the cost model):
60 000
|Investment property (measured under the cost
81 000
model:
Inventory
20 000
The recoverable amounts at 31 December 2014 for the goodwill and investment property could not be estimated on an
individual basis, but the recoverable amount for equipment was estimated to be $40 000. In accordance with IAS 2 the net
realizable value of the inventory was $15 000.
Required:
Calculate whether the cash-generating unit is impaired and compute the impairment loss if there's any.
Danube, Toggle, and ConnectOn rely on various intangible assets to operate their businesses. These companies amortize the cost of
these assets using the straight-line method over the following average estimated useful lives (in years), as reported in their annual
reports.
Type of Intangible Asset
Developed Technology
Danube
5.4
Trade Names
5.9
Toggle
5.6
10.1
ConnectOn
3.5
11.5
Customer Relationships
5.1
5.5
7.5
Required:
1. Based on these estimates, identify the company that uses the longest periods for amortizing most of its classes of intangible assets.
Toggle
Danube
ConnectOn
2. Will these estimates increase or decrease that company's net income relative to its competitors?
Increase
Decrease
Chapter 8 Solutions
Financial Accounting
Ch. 8 - Define long-lived assets. Why are they considered...Ch. 8 - Prob. 2QCh. 8 - What are the classifications of long-lived assets?...Ch. 8 - Prob. 4QCh. 8 - Describe the relationship between the expense...Ch. 8 - Prob. 6QCh. 8 - Prob. 7QCh. 8 - In computing depreciation, three values must be...Ch. 8 - The estimated useful life and residual value of a...Ch. 8 - Prob. 10Q
Ch. 8 - Prob. 11QCh. 8 - Prob. 12QCh. 8 - Prob. 13QCh. 8 - Prob. 14QCh. 8 - Prob. 15QCh. 8 - Why is depreciation expense added to net income...Ch. 8 - Miga Company and Porter Company both bought a new...Ch. 8 - Leslie, Inc.. followed the practice of...Ch. 8 - Prob. 3MCQCh. 8 - Prob. 4MCQCh. 8 - Prob. 5MCQCh. 8 - Prob. 6MCQCh. 8 - Prob. 7MCQCh. 8 - Prob. 8MCQCh. 8 - Prob. 9MCQCh. 8 - (Chapter Supplement) Irish Industries purchased a...Ch. 8 - Prob. 8.1MECh. 8 - Prob. 8.2MECh. 8 - Prob. 8.3MECh. 8 - Prob. 8.4MECh. 8 - Computing Book Value (Double-Declining-Balance...Ch. 8 - Computing Book Value (Units-of-Production...Ch. 8 - Identifying Asset Impairment LO8-4 For each of the...Ch. 8 - Prob. 8.8MECh. 8 - Prob. 8.9MECh. 8 - Prob. 8.10MECh. 8 - Prob. 8.1ECh. 8 - Prob. 8.2ECh. 8 - Computing and Recording Cost and Depreciation of...Ch. 8 - Determining Financial Statement Effects of an...Ch. 8 - Determining Financial Statement Effects of an...Ch. 8 - Recording Depreciation and Repairs (Straight-Line...Ch. 8 - Prob. 8.7ECh. 8 - Prob. 8.8ECh. 8 - Computing Depreciation under Alternative Methods...Ch. 8 - Computing Depreciation under Alternative Methods...Ch. 8 - Prob. 8.11ECh. 8 - Prob. 8.12ECh. 8 - Prob. 8.13ECh. 8 - Computing Depreciation and Book Value for Two...Ch. 8 - Prob. 8.15ECh. 8 - Recording the Disposal of an Asset at Three...Ch. 8 - Prob. 8.17ECh. 8 - Prob. 8.18ECh. 8 - Prob. 8.19ECh. 8 - Prob. 8.20ECh. 8 - Prob. 8.21ECh. 8 - Prob. 8.22ECh. 8 - (Chapter Supplement) Recording a Change in...Ch. 8 - Prob. 8.24ECh. 8 - Prob. 8.25ECh. 8 - Explaining the Nature of a Long-Lived Asset and...Ch. 8 - Analyzing the Effects of Repairs, an Addition, and...Ch. 8 - Prob. 8.3PCh. 8 - Best Buy Co., Inc., headquartered in Richfield,...Ch. 8 - Evaluating the Effect of Alternative Depreciation...Ch. 8 - Recording and Interpreting the Disposal of Three...Ch. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Computing Goodwill from the Purchase of a Business...Ch. 8 - Prob. 8.10PCh. 8 - Prob. 8.11PCh. 8 - Explaining the Nature of a Long-Lived Asset and...Ch. 8 - Prob. 8.2APCh. 8 - Computing the Acquisition Cost and Recording...Ch. 8 - Prob. 8.4APCh. 8 - Recording and Interpreting the Disposal of Three...Ch. 8 - Prob. 8.6APCh. 8 - Prob. 8.7APCh. 8 - Asset Acquisition, Depreciation, and Disposal Pool...Ch. 8 - Case A. Dr Pepper Snapple Croup, Inc., is a...Ch. 8 - Prob. 8.1BCOMPCh. 8 - Prob. 8.1CCOMPCh. 8 - Case D. Stewart Company reports the following...Ch. 8 - Case E. Matson Company purchased the following on...Ch. 8 - Prob. 8.1CPCh. 8 - Finding Financial Information LO8-1, 8-2, 8-6...Ch. 8 - Comparing Companies within an Industry Refer to...Ch. 8 - Prob. 8.4CPCh. 8 - Prob. 8.5CPCh. 8 - Prob. 8.6CPCh. 8 - Evaluating the Impact of Capitalized Interest on...
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