Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Question
Chapter 12, Problem 12.4E
a.
To determine
To calculate: Impairment loss for Franchise, patent and Trade name.
Given information:
Carrying cost of Franchise is $850,000.
Carrying cost of Trade name is $3,950,000.
Carrying cost of Patent is $400,000.
b.
To determine
To prepare:
c.
To determine
To prepare: Journal entry to record the annual amortization.
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SAR Research Associates reports the following intangible assets on its December 31 balance sheet
Intangible Asset
Net Carrying Value
Remaining Life
Franchise
$860,000
5 years
Patent
410,000
3 years
Trade name
3,960,000
N/A
Total
$5,230,000
It does not use a separate accumulated amortization account for the intangible assets (i.e., it deducts the amount of amortization directly from the intangible asset account).
Management provided the following information related to intangible assets it obtained during the current year:
•
Franchise: Due to current market conditions, products sold under the franchise have experienced significant sales declines from possible obsolescence.
•
Patent:
SAR
is currently involved in litigation that will determine whether the company has the exclusive right to sell the patented product. Legal counsel informed
SAR
that the value of the patent will likely be reduced.
•…
Computing Impairment of Intangible Assets
Stiller Company had the following information for its three intangible assets.
1. Patent: A patent was purchased for $180,000 on June 30, 2018. Stiller estimated the useful life of the patent to be 15 years. On December 31, 2020, the estimated future cash flows attributed to the patent were $153,000. The fair value of the patent
was $135,000.
2. Trademark: A trademark was purchased for $9,000 on August 31, 2019. The trademark is considered to have an indefinite life. The fair value of the trademark on December 31, 2020, is $4,500.
3. Goodwill: Stiller recorded goodwill in January 2019, related to a purchase of another company. The carrying value of goodwill is $54,000 on December 31, 2020. On December 31, 2020, the segment for which the goodwill relates had a fair value of
$1,044,000. The book value of the net assets of the segment (including goodwill) is $1,080,000.
Note: Round each of your answers to the nearest whole dollar.
a. Classify each…
The intangible assets and goodwill reported by Sunland Corporation at December 31, 2020, follow:
Copyrights (#1)
$36,120
Less: Accumulated
amortization
$ 18,060
18,060
Trademarks
53,130
Goodwill
124,750
Total
$195,940
A copyright (#1) was acquired on January 1, 2019, and has a useful life of four years. The trademarks were acquired on January 1, 2017, and are expected to have an
indefinite life. The company has a December 31 year end and prepares adjusting journal entries annually.
The following cash transactions may have affected intangible assets and goodwill during 2021:
Jan.
Paid $6,690 in legal costs to successfully defend the
trademarks against infringement by another company.
July
Developed a new product, incurring $193,940 in research and
$48,300 in development costs with probable future benefits.
The product is expected to have a useful life of 21 years.
Sept.
Paid $59,790 to a popular hockey player to appear in
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Chapter 12 Solutions
Intermediate Accounting
Ch. 12 - Prob. 12.1QCh. 12 - Can firms group all property, plant, and equipment...Ch. 12 - Prob. 12.3QCh. 12 - Prob. 12.4QCh. 12 - Do firms follow the same steps for impairment...Ch. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Under IFRS, if a firm recovers an impairment loss...Ch. 12 - Under IFRS, when do firms test plant assets and...
Ch. 12 - Prob. 12.11QCh. 12 - Prob. 12.12QCh. 12 - Prob. 12.1MCCh. 12 - Prob. 12.2MCCh. 12 - Prob. 12.3MCCh. 12 - Prob. 12.4MCCh. 12 - Prob. 12.5MCCh. 12 - Prob. 12.6MCCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Prob. 12.3BECh. 12 - Prob. 12.4BECh. 12 - Indefinite-Life Intangible Asset Impairment....Ch. 12 - Prob. 12.6BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Prob. 12.11BECh. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Prob. 12.14BECh. 12 - Prob. 12.15BECh. 12 - Prob. 12.16BECh. 12 - Prob. 12.17BECh. 12 - Prob. 12.18BECh. 12 - Prob. 12.19BECh. 12 - Prob. 12.20BECh. 12 - Prob. 12.21BECh. 12 - Prob. 12.22BECh. 12 - Prob. 12.23BECh. 12 - Tangible Asset Impairment. Henne Optical...Ch. 12 - Tangible Asset Impairment Loss. Use the same...Ch. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Tangible Asset Impairment Loss, IFRS. Use the same...Ch. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - Assets Held for Disposal. Hattie Corporation...Ch. 12 - Prob. 12.11ECh. 12 - Asset Revaluation, Downwards, IFRS. Lousa Company...Ch. 12 - Tangible Asset Impairment. Chrispian Cookies, Inc....Ch. 12 - Prob. 12.2PCh. 12 - Tangible Asset Impairment. Using the same...Ch. 12 - Prob. 12.4PCh. 12 - Goodwill Impairment, Tangible Fixed Assets, and...Ch. 12 - Tangible Asset Impairment, Potential Reversal,...Ch. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Comprehensive Asset Revaluation Problem (Initial...Ch. 12 - Prob. 12.11PCh. 12 - Judgment Case 1: Impairments of PPE under IFRS...Ch. 12 - Prob. 2JCCh. 12 - Prob. 3JCCh. 12 - Financial Statement Analysis Case 1: Long-Lived...Ch. 12 - Surfing the Standards Case 1: Impairments of PPE...Ch. 12 - Prob. 2SSCCh. 12 - Prob. 1BCCCh. 12 - Basis for Conclusions Case 2: Intangible Assets ...Ch. 12 - Basis for Conclusions Case 3: Goodwill Impairment...
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