STARK INDUSTRIES reports the following patents on its December 31, 2019 statement of financial position. Useful Life (at date of acquisition) 17 years 10 years 4 years Initial Cost Date of Acquisition March 1, 2016 July 1, 2017 September 1, 2018 Patent A 1,224,000.00 Patent B 450,000.00 432,000.00 Patent C The following events occurred during the year ended December 31, 2020. a. Research and development costs of P 737,100 were incurred during the year. These costs were incurred prior to projects achieving economic viability. b. Patent D was purchased on July 1 for P 855,000. It has a remaining life 9% years. c. A possible impairment of Patent B's value may have occurred at December 31, 2020. This is due to a significant reduction in the demands for certain products protected by Patent B. The company's controller estimates the following future cash flows from Patent B. December 31, 2021 December 31, 2022 December 31, 2023 60,000.00 60,000.00 60,000.00 The appropriate discount rate to be used for these cash flows is 8%. (Round of PV factors to 4 decimal places)
STARK INDUSTRIES reports the following patents on its December 31, 2019 statement of financial position. Useful Life (at date of acquisition) 17 years 10 years 4 years Initial Cost Date of Acquisition March 1, 2016 July 1, 2017 September 1, 2018 Patent A 1,224,000.00 Patent B 450,000.00 432,000.00 Patent C The following events occurred during the year ended December 31, 2020. a. Research and development costs of P 737,100 were incurred during the year. These costs were incurred prior to projects achieving economic viability. b. Patent D was purchased on July 1 for P 855,000. It has a remaining life 9% years. c. A possible impairment of Patent B's value may have occurred at December 31, 2020. This is due to a significant reduction in the demands for certain products protected by Patent B. The company's controller estimates the following future cash flows from Patent B. December 31, 2021 December 31, 2022 December 31, 2023 60,000.00 60,000.00 60,000.00 The appropriate discount rate to be used for these cash flows is 8%. (Round of PV factors to 4 decimal places)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 13E
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Compute for the carrying amount of patents on December 31, 2021
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