Stiller Company had the following information for its three intangible assets. Patent: A patent was purchased...
Stiller Company had the following information for its three intangible assets.
- Patent: A patent was purchased for $200,000 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 $170,000. The fair value of the patent was $150,000.
- Trademark: A trademark was purchased for $10,000 on August 31, 2019. The trademark is considered to have an indefinite life. The fair value of the trademark on December 31, 2020, is $5,000.
- Goodwill: Stiller recorded goodwill in January 2019, related to a purchase of another company. The carrying value of goodwill is $60,000 on December 31, 2020. On December 31, 2020, 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.
Note: Round each of your answers to the nearest whole dollar.
a. Classify each of the intangible assets above as a finite life intangible or an indefinite life intangible.
b. Determine the carrying value of each asset on December 31, 2020, prior to testing for impairment, assuming that the company uses the straight-line method to amortize intangible assets, and no impairment was reported prior to 2020.
| Carrying value of patent, Dec. 31, 2020, before impairment testing | |
| Carrying value of trademark, Dec. 31, 2020, before impairment testing | |
| Carrying value of goodwill, Dec. 31, 2020, 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, 2020, after impairment testing.
| Carrying value of patent, Dec. 31, 2020, after impairment testing | |
| Carrying value of trademark, Dec. 31, 2020, after impairment testing | |
| Carrying value of goodwill, Dec. 31, 2020, after impairment testing |
Homework Answers
| Part a | Part b | Part c | ||
| Impairment | Carrying Value after impairement | |||
| Patent | Finite life | 199998 | 200000-170000=30000 | 170000 |
| Trademark | Indefinite life | 10000 | 10000-5000=5000 | 5000 |
| Goodwill | Indefinite life | 60000 | Fair Value of segment=1160000 | 40000 |
| Book value of assets including goodwill=1200000 | ||||
| Value of goodwill = 1200000-1160000= 40000 | ||||
| Impairment=60000-40000=20000 |
Add Answer to:
Stiller Company had the following information for its three
intangible assets.
Patent: A patent was purchased...
Bluestone Company had three intangible assets at the end of the current year: A patent purchased...
Bluestone Company had three
intangible assets at the end of the current year: A patent
purchased this year from Miller Co. on January 1 for a cash cost of
$7,500. When purchased, the patent had an estimated life of 15
years. A trademark was registered with the federal government for
$6,500. Management estimated that the trademark could be worth as
much as $170,000 because it has an indefinite life. Computer
licensing rights were purchased this year on January 1 for...
2. Review the following information pertaining to Denzel Company. 1. A patent was purchased on January...
2. Review the following information pertaining to Denzel Company. 1. A patent was purchased on January 2, 2018, for $65,000 when the remaining legal life was 16 years. On January 2, 2020, Denzel determined that the remaining useful life of the patent was only eight years from the date of its acquisition. On January 1, 2020, Denzel Company purchased a second patent for $80,000 cash. At January 1, 2020, 6 years of the patent's legal life of 20 years had...
Saved Springer Company had three intangible assets at the end of 2020 (end of the accounting...
Saved Springer Company had three intangible assets at the end of 2020 (end of the accounting year) a. A copyright purchased on January 1, 2020, for a cash cost of $15,100. The copyright is expected to have a 10-year useful life to Springer. b. Goodwill of $71,000 from the purchase of the Hartford Company on July 1, 2019. C. A patent purchased on January 1, 2019, for $44,000. The inventor had registered the patent with the U.S. Patent and Trademark...
Bluestone Company had three intangible assets at the end of the current year: a. A patent...
Bluestone Company had three intangible assets at the end of the current year: a. A patent purchased this year from Miller Co. on January 1 for a cash cost of $6,000. When purchased, the patent had an estimated life of 10 years. b. A trademark was registered with the federal government for $45,000. Management estimated that the trademark could be worth as much as $130,000 because it has an indefinite life. c. Computer licensing rights were purchased this year on...
On January 1, 2020 (the first day of its fiscal year) Stellar Ltd. acquired a patent...
On January 1, 2020 (the first day of its fiscal year) Stellar Ltd. acquired a patent which gave the company the right to use a production process. The process met the six criteria for capitalization as an intangible asset. Below is a listing of the events relating to the patent over the five fiscal years from 2020 through 2024: 2020: ● on January 1, acquired the patent for the production process from its inventory for a cash payment of $13,350,000,...
Wember Company acquired a subsidiary company on December 31, 2012, and recorded the cost of the intangible assets it acquired as follows: Patent $100,000 Trade name 80,000 Goodwill 150,000 The patent...
Wember Company acquired a subsidiary company on December 31, 2012, and recorded the cost of the intangible assets it acquired as follows: Patent $100,000 Trade name 80,000 Goodwill 150,000 The patent is being amortized by the straight-line method over an expected life of 10 years with no residual value. Amortization has been recorded for the current year. The trade name was considered to have an indefinite life. Because of the success of the subsidiary in the past, Wember has not...
3 Bluestone Company had three intangible assets at the end of the current year: a. A patent purch...
3 Bluestone Company had three intangible assets at the end of the current year: a. A patent purchased this year from Miller Co. on January 1 for a cash cost of $2,700. When purchased, the patent had an estimated life of 9 years as much as $150,000 because it has an indefinite life life to the company b. A trademark was registered with the federal government for $5,500. Management estimated that the trademark could be worth 10 points C. Computer...
Kreiser Company had three intangible assets at the end of 2017 (end of the accounting year):...
Kreiser Company had three intangible assets at the end of 2017 (end of the accounting year): a. A patent was purchased from J. Miller on January 1, 2017, for a cash cost of $5,640. When purchased, the patent had an estimated life of fifteen years. b. A trademark was registered with the federal government for $10,000. Management estimated that the trademark could be worth as much as $200,000 because it has an indefinite life. c. On January 1, 2017, computer...
Springer Company had three intangible assets at the end of 2020 end of the accounting year...
Springer Company had three intangible assets at the end of 2020 end of the accounting year A copyright purchased on January 1, 2020, for a cash cost of $16100. The copyright is expected to have a 10-year useful life to Springer b Goodwill of $81,000 from the purchase of the Hartford Company on July 1, 2019, cA patent purchased on January 1, 2019. for $64,000. The inventor had registered the patent with the US Patent and Trademark Office on January...
Support Computing Impairment of Patent In January 2017, Idea Company purchased a patent for a new...
Support Computing Impairment of Patent In January 2017, Idea Company purchased a patent for a new consumer product for $153,000. At the time of purchase, the remaining legal life of the patent was 17 years. However, because of the competitive nature of the market, the patent was estimated to have a useful life of 10 years. During 2021, it was determined that there was a potential health hazard present in the product As a result, the estimated future cash flows...
Bluestone Company had three
intangible assets at the end of the current year: A patent
purchased this year from Miller Co. on January 1 for a cash cost of
$7,500. When purchased, the patent had an estimated life of 15
years. A trademark was registered with the federal government for
$6,500. Management estimated that the trademark could be worth as
much as $170,000 because it has an indefinite life. Computer
licensing rights were purchased this year on January 1 for...
2. Review the following information pertaining to Denzel Company. 1. A patent was purchased on January 2, 2018, for $65,000 when the remaining legal life was 16 years. On January 2, 2020, Denzel determined that the remaining useful life of the patent was only eight years from the date of its acquisition. On January 1, 2020, Denzel Company purchased a second patent for $80,000 cash. At January 1, 2020, 6 years of the patent's legal life of 20 years had...
Saved Springer Company had three intangible assets at the end of 2020 (end of the accounting year) a. A copyright purchased on January 1, 2020, for a cash cost of $15,100. The copyright is expected to have a 10-year useful life to Springer. b. Goodwill of $71,000 from the purchase of the Hartford Company on July 1, 2019. C. A patent purchased on January 1, 2019, for $44,000. The inventor had registered the patent with the U.S. Patent and Trademark...
3 Bluestone Company had three intangible assets at the end of the current year: a. A patent purchased this year from Miller Co. on January 1 for a cash cost of $2,700. When purchased, the patent had an estimated life of 9 years as much as $150,000 because it has an indefinite life life to the company b. A trademark was registered with the federal government for $5,500. Management estimated that the trademark could be worth 10 points C. Computer...
Kreiser Company had three intangible assets at the end of 2017 (end of the accounting year): a. A patent was purchased from J. Miller on January 1, 2017, for a cash cost of $5,640. When purchased, the patent had an estimated life of fifteen years. b. A trademark was registered with the federal government for $10,000. Management estimated that the trademark could be worth as much as $200,000 because it has an indefinite life. c. On January 1, 2017, computer...
Springer Company had three intangible assets at the end of 2020 end of the accounting year A copyright purchased on January 1, 2020, for a cash cost of $16100. The copyright is expected to have a 10-year useful life to Springer b Goodwill of $81,000 from the purchase of the Hartford Company on July 1, 2019, cA patent purchased on January 1, 2019. for $64,000. The inventor had registered the patent with the US Patent and Trademark Office on January...
Support Computing Impairment of Patent In January 2017, Idea Company purchased a patent for a new consumer product for $153,000. At the time of purchase, the remaining legal life of the patent was 17 years. However, because of the competitive nature of the market, the patent was estimated to have a useful life of 10 years. During 2021, it was determined that there was a potential health hazard present in the product As a result, the estimated future cash flows...
Most questions answered within 3 hours.
-
For the following reaction, 0.128 moles of
potassium hydrogen sulfateare mixed with
0.504 moles of potassium...
asked 1 hour ago -
1. What is the present value of $400, three years in the future
if the interest...
asked 1 hour ago -
The labor force minus the number of employed equals the number
of unemployed.
a. True
b....
asked 3 hours ago -
Determine the mass in units of grams [g] of 0.49 moles [mol]
of a new fictitious...
asked 4 hours ago -
A horizontal mass of M=5kg is on a spring and stretched to
x=0.5m when released from...
asked 5 hours ago -
26 of 50
"I have worked at the Arizona Humane Society for ten years, and
have...
asked 5 hours ago -
Compare and contrast zero based budgeting and incremental (or
base year) budgeting.
asked 5 hours ago -
4 pts 10. Which of the following hypothesis would be MOST
difficult to test experimentally? Group...
asked 5 hours ago -
A business owner makes 1,000 items a day. Each day he or she
contributes eight hours...
asked 5 hours ago -
A
circular loop in the plane of a paper lies inca0.65 T magnetic
field pointing into...
asked 6 hours ago -
A business owner is trying to decide whether to buy, rent, or
lease office space and...
asked 6 hours ago -
Thermal Storage Solar heating of a house is much more efficient
if there is a way...
asked 6 hours ago