Theriault Corporation has five different intangible assets to be accounted for and reported on the financial statements.

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Theriault Corporation has five different intangible assets to be accounted for and reported on the financial statements. The management is concerned about the amortization of the cost of each of these intangibles. Facts about each intangible follow:
a. Patent. The company purchased a patent at a cash cost of $ 18,600 on January 1, 2015. The patent had a legal life of 20 years from the date of registration with the Canadian Intellectual Property Office, which was January 1, 2013. It is amortized over its remaining legal life.
b. Copyright. On January 1, 2015, the company purchased a copyright for $ 24,750 cash. The legal life remaining from that date is 30 years. It is estimated that the copyrighted item will have no value by the end of 15 years.
c. Franchise. The company obtained a franchise from Farrell Company to make and distribute a special item. It obtained the franchise on January 1, 2015, at a cash cost of $ 19,200 for a 12- year period.
d. Licence. On January 1, 2014, the company secured a licence from the city to operate a special service for a period of seven years. Total cash expended to obtain the licence was $ 21,000.
e. Goodwill. The company started business in January 2013 by purchasing another business for a cash lump sum of $ 650,000. The purchase price included $ 75,000 for goodwill. Company executives stated that “ the goodwill is an important long- lived asset to us.” It has an indefinite life.
Required:
1. Compute the amount of amortization expense that should be recorded for each intangible asset at the end of the fiscal year, December 31, 2015.
2. Compute the carrying amount of each intangible asset on January 1, 2018.
3. Assume that on January 2, 2018, the franchise was impaired in its ability to continue to produce strong revenues. The other intangible assets were not affected. Theriault estimated that the franchise will be able to produce future cash flows of $ 16,500, with a fair value of $ 15,000. Compute the amount, if any, of the impairment loss to be recorded. Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...
Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Financial Accounting

ISBN: 978-1259103285

5th Canadian edition

Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M

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