Question 2 Not complete Marked out of 1.25 Computing Impairment of Intangible Assets Stiller Company had the following information for its three intangible assets. Patent: A patent was purchased for $200,000 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 $170,000. The fair value of the patent was $150,000. Trademark: A trademark was purchased for $10,000 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 $5,000. Goodwill: Stiller recorded goodwill in January of Year 2, related to a purchase of another company. The carrying value of goodwill is $60,000 on December 31 of Year 3. On December 31 of Year 3, the segment for which the goodwill relates had a fair value of $1,160,000. The book value of the net assets of the segment (including goodwill) is $1,200,000. a. Classify each of the intangible assets above as a finite life intangible or an indefinite life intangible. Patent Finife life intangible Trademark indefinte life intangible Goodwill Indefinite life intangible 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 $

Question 2 Not complete Marked out of 1.25 Computing Impairment of Intangible Assets Stiller Company had the following information for its three intangible assets. Patent: A patent was purchased for $200,000 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 $170,000. The fair value of the patent was $150,000. Trademark: A trademark was purchased for $10,000 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 $5,000. Goodwill: Stiller recorded goodwill in January of Year 2, related to a purchase of another company. The carrying value of goodwill is $60,000 on December 31 of Year 3. On December 31 of Year 3, the segment for which the goodwill relates had a fair value of $1,160,000. The book value of the net assets of the segment (including goodwill) is $1,200,000. a. Classify each of the intangible assets above as a finite life intangible or an indefinite life intangible. Patent Finife life intangible Trademark indefinte life intangible Goodwill Indefinite life intangible 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 $

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 62E

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