Computing Impairment of Intangible Assets Stiller Company had the following information for its three intangible assets....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Computing Impairment of Intangible Assets Stiller Company had the following information for its three intangible assets. 1. Patent: A patent was purchased for $220,000 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 patent were $187,000. The fair value of the patent was $165,000. 2. Trademark: A trademark was purchased for $11,000 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 $5,500. 3. Goodwill: Stiller recorded goodwill in January of Year 2, related to a purchase of another company. The carrying value of goodwill is $66,000 on December 31 of Year 3. On December 31 of Year 3, the segment for which the goodwill relates had a fair value of $1,276,000. The book value of the net assets of the segment (including goodwill) is $1,320,000. a. Classify each of the intangible assets above as a finite life intangible or an indefinite life intangible. Patent Trademark Goodwill b. Determine the carrying value of each intangible asset on December 31 of Year 3, prior to testing for impairment. Assume that the company uses the straight-line method to amortize intangible assets, and no impairment was reported prior to Year 3. Note: Round each of your answers to the nearest whole dollar. $ Carrying value of patent, Dec. 31, Year 3, before impairment testing Carrying value of trademark, Dec. 31, Year 3, before impairment testing $ Carrying value of goodwill, Dec. 31, Year 3, before impairment testing $ 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 of Year 3 after impairment testing. Note: Round each of your answers to the nearest whole dollar. Carrying value of patent, Dec. 31, Year 3, after impairment testing Carrying value of trademark, Dec. 31, Year 3, after impairment testing $ Carrying value of goodwill, Dec. 31, Year 3, after impairment testing $ $ Computing Impairment of Intangible Assets Stiller Company had the following information for its three intangible assets. 1. Patent: A patent was purchased for $220,000 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 patent were $187,000. The fair value of the patent was $165,000. 2. Trademark: A trademark was purchased for $11,000 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 $5,500. 3. Goodwill: Stiller recorded goodwill in January of Year 2, related to a purchase of another company. The carrying value of goodwill is $66,000 on December 31 of Year 3. On December 31 of Year 3, the segment for which the goodwill relates had a fair value of $1,276,000. The book value of the net assets of the segment (including goodwill) is $1,320,000. a. Classify each of the intangible assets above as a finite life intangible or an indefinite life intangible. Patent Trademark Goodwill b. Determine the carrying value of each intangible asset on December 31 of Year 3, prior to testing for impairment. Assume that the company uses the straight-line method to amortize intangible assets, and no impairment was reported prior to Year 3. Note: Round each of your answers to the nearest whole dollar. $ Carrying value of patent, Dec. 31, Year 3, before impairment testing Carrying value of trademark, Dec. 31, Year 3, before impairment testing $ Carrying value of goodwill, Dec. 31, Year 3, before impairment testing $ 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 of Year 3 after impairment testing. Note: Round each of your answers to the nearest whole dollar. Carrying value of patent, Dec. 31, Year 3, after impairment testing Carrying value of trademark, Dec. 31, Year 3, after impairment testing $ Carrying value of goodwill, Dec. 31, Year 3, after impairment testing $ $
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Use this table for the next 5 questions : Bacon and Associates , a famous Northwest think tank , has provided probability estimates for the four potential economic states for the coming year . The...
-
Question 3 Adrian and Bryan are partners in their partnership business as suppliers of various magazines to bookshops. The terms of agreement for the partnership until 30 June 2021 were as follows:...
-
The following questions are adapted from a variety of sources including questions developed by the AICPA Board of Examiners and those used in the Kaplan CPA Review Course to study property, plant,...
-
Find a basis for the subspace Wspanned by {v1, v2 , V3, V4}. 2 Let vi = -3,v2 = 2 ,v3 -2,v4 = 3
-
Medical researcher, Corey Flex, is investigating the claim that consumption of steroids increases a persons strength. Twenty-two weight-lifting addicts are recruited to participate in the study. To...
-
What is the dividend puzzle?
-
Using the information in E7-1, assume that in July 2002, Voss Company incurs the following manufacturing overhead costs. Instructions (a) Prepare a flexible budget performance report, assuming that...
-
Breeze Toothpaste Company makes tubes of toothpaste. The product is produced and then pumped into tubes and capped. The production manager is concerned whether the filling process for the tubes of...
-
Suppose that you have two job offers. Job A has a salary of $62,400 per year and Job B has a full-time rate of $29 per hour. Which job pays more on a weekly basis? Round to the nearest whole number...
-
(c) Evaluate |X()dw. Answer Example ; 45pi/2 (copy/paste then modify this incorrect answer)
-
In the study of markets, economists define consumers' willingness and ability to spend as the maximum amount that consumers are willing and able to spend for a specific quantity of goods or services....
-
The LOL Company had the following items in its complex capital structure on December 31, 2023: Preferred stock, $8 par value, $1 dividend, 10,000 shares issued and outstanding. Common stock, $5...
-
If the following quotes are on September 15, 2012, what was the coupon rate for the JDVR bonds with $1,000 face values and semiannual payments? Company (Ticker) Coupon Maturity Last Price Last Yield...
-
- Given x = 21 +5, y=615-1214 +7, find dy dx
-
In Spider-Man 2 (2004), Spider-Man (the Toby Maguire one) stopsa runaway train with his webs, taking about 30 seconds of movietime. Assume that the trains initial speed before Spidey startingapplying...
-
Rockyford Company must replace some machinery that has zero book value and a current market value of $1,400. One possibility is to invest in new machinery costing $43,000. This new machinery would...
-
What is the difference between adsorption and absorption?
-
Which method should be used for estimating the value of a company in decline?
-
Name the types of companies for which cash flow value is much higher than net asset value.
-
What is the popular saying on which the cash flow fade method is founded?
Economic Prehistory Six Transitions That Shaped The World 1st Edition - ISBN: 1108839908 - Free Book
Study smarter with the SolutionInn App