Using the data from P7-5, indicate the effects on the liquidity metric free cash flow and profitability metric asset turnover for each of the following:
1. Impaired goodwill
2. Patent amortization
3. Natural resource depletion
Data from P7-5
Data related to the acquisition of timber rights and intangible assets of Gemini Company during the current year ended December 31 are as follows:
a. On December 31, Gemini Company determined that $3,000,000 of goodwill was impaired.
b. Governmental and legal costs of $920,000 were incurred by Gemini Company on June 30 in obtaining a patent with an estimated economic life of eight years. Amortization is to be for one-half year.
c. Timber rights on a tract of land were purchased for $1,350,000 on March 6. The stand of timber is estimated at 15,000,000 board feet. During the current year, 3,300,000 board feet of timber were cut and sold.