1. record the transactions:
2. 1.December 1, P³ purchased Gary’s Gag Garage (G³), seller of magic tricks and practical joke items. P³ paid $9,000,000 for G³ whose information at December 1 is as follows:

Account	Book Value	Fair Value
Cash	$500,000	$500,000
Accounts Receivable	$1,000,000	$940,000
Inventory	$2,400,000	$2,250,000
Equipment	$1,375,000	$1,220,000
Building	$50,000	$850,000
Trademarks	$0	$1,500,000
Liabilities	$212,000	$212,000

P³ assumes a 10-year life for the trademarks, 5 for the equipment, and 20 for the building. P3 will use straight line depreciation for these purchased assets.

2. 2. At the end of the year, P³ believed a trademark, that had a carrying value of $75,000 had suffered impairment due to the aging of the design for that particular line of party favors. The fair value of the trademark is $62,000 and the future cash flows are estimated to be $66,000. The trademark will be fully amortized by 12-31-202

Answer rating: 100% (QA)

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