Depletion, patent amortization, goodwill impairment Data related to the acquisition of timber rights and intangible assets of Gemini Company during the current year ended December 31 are as follows: On December 31, Gemini Company determined that $3,000,000 of goodwill was impaired. 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. 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. Indicate the effects on the liquidity metric free cash flow and profitability metric asset turnover for each of the following: Liquidity Free Cash Flow Profitability Asset Turnover 1. Impaired goodwill (Higher, lower or no effect) (Higher, lower or no effect) 2. Patent amortization (Higher, lower or no effect) (Higher, lower or no effect) 3. Natural resource depletion (Higher, lower or no effect) (Higher, lower or no effect)
Depletion, patent amortization, goodwill impairment Data related to the acquisition of timber rights and intangible assets of Gemini Company during the current year ended December 31 are as follows: On December 31, Gemini Company determined that $3,000,000 of goodwill was impaired. 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. 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. Indicate the effects on the liquidity metric free cash flow and profitability metric asset turnover for each of the following: Liquidity Free Cash Flow Profitability Asset Turnover 1. Impaired goodwill (Higher, lower or no effect) (Higher, lower or no effect) 2. Patent amortization (Higher, lower or no effect) (Higher, lower or no effect) 3. Natural resource depletion (Higher, lower or no effect) (Higher, lower or no effect)
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
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 11E: On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an...
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Depletion, patent amortization,
Data related to the acquisition of timber rights and intangible assets of Gemini Company during the current year ended December 31 are as follows:
- On December 31, Gemini Company determined that $3,000,000 of goodwill was impaired.
- 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.
- 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.
Indicate the effects on the liquidity metric
Liquidity Free Cash Flow |
Profitability Asset Turnover |
|
1. Impaired goodwill | (Higher, lower or no effect) | (Higher, lower or no effect) |
2. Patent amortization | (Higher, lower or no effect) | (Higher, lower or no effect) |
3. Natural resource depletion | (Higher, lower or no effect) | (Higher, lower or no effect) |
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