Answer parts A, B, C, D and E to receive full credit for #2:

A: Mikes knife Company needs to determine if is indefinite life intangibles other than goodwill have been impaired and should be reduced or written off on its balance sheet. the impairment test(s) to be used is(are)

1. recoverability test- yes; fair value test- yes

2. recoverability test- yes; fair value test- no

3. recoverability test- no; fair value test- yes

4. recoverability test- no; fair value test- no

B: a company buys a drilling rig for 8,600,000 on january 1, 2019. the rig has a salvage value of 200,000 and is depreciated using the double declining balance method. the life of the rig is 5 years and the expected cost to dismantle the rig at the end of 5 years is 550,000. 7% is an appropriate interest rate for this company. How much is the total expense to be recorded in 2020 as a result of these events?

1. 2,093,372

2. 2,187,488

3. 3,467,451

4. 3,624,311

C: On October 1, 2021, Bob's Inc. bought a patent for a new consumer product for $720,000. At the time of the purchase, the patent was valid for 10 years. On February 1, 2024, Bob incurred $24,000 in legal fees for the successful defense of the patent. he estimated remaining life of the patent was revised to 4 years as of February 1, 2014. What amount should Bob charge to Patent Amortization expense for 2024, assuming amortization is recorded using the straight line method?

1. $132,000

2. $138,000

3. $144,000

4. $150,000

D. Roberts Manufacturing company decided to expand further by purchasing Leo's Company. The balance sheet of Leos Company as of December 31, 2013 was as follows:

assets		Liabilities and Equities
cash	$100,000	Accounts payable	$175,000
Receivibles	$150,000	common stock	$600,000
Inventory	$200,000	retained earnings	$675,000
Plant assets (net)	$1,000,000
Total assets	$1,450,000	Total Liabilities and equities	$1,450,000

An appraisal agreed to by the parties indicated that the fair market value of the inventory was $250,000 and that the fair market value of the plant assets was $1,100,000. The fair market value of all other accounts is equal to the amount reported on the balance sheet. Additionally, it was agreed that the fair value of Leos internet domain name was $8,000. Leo had never recognized any value for this internally generated name. The agreed purchase price was $1,500,000 and this amout was paid in cash to the previous owners of Leos company. How much goodwill should Robert report for this purchase?

1. $67,000

2. $75,000

3. $125,000

4. $225,000

E. The following information is available for Jessicas Company for the month of january, and Jessica uses (1) average costing method under the perpetual system, (2) LIFO cost flow assumption under the perpetual system.

	number of units	units cost price ($)
begining inventory (january 1)	450	80
purchase (january 10)	600	90
Sale (january 13)	350	144
Purchase (january 28)	200	96
Sale (january 30)	400	148

what is the amount of tax savings (after rounding for january) if Jessica uses (2) LIFO perpetual instead of (1) average cost perpetual assuming that the rax rate is at 35%?

1. $1,125

2. $1,275

3. $2,175

4. $2,275