Homework Answers
| Excel in Practice | |||
| E12-4a | |||
| SMC Research Associates | |||
| Finite-Life and Indefinite-Life Intangible Asset Impariement | |||
| Current Year | |||
| Intangible Asset | Franchise | ||
| Future Period | Cash Flow Projection | Present Value @ 8% | Discounted Cash Flow |
| Year 1 | 3,00,000 | 0.93 | 2,77,778 |
| Year 2 | 2,20,000 | 0.86 | 1,88,615 |
| Year 3 | 1,10,000 | 0.79 | 87,322 |
| Year 4 | 45,000 | 0.74 | 33,076 |
| Year 5 | 25,000 | 0.68 | 17,015 |
| Present Value of Estimated Cash Flow of Franchise | 6,03,805 | ||
| Net Carrying Value | 8,50,000 | ||
| Impairement Loss = Net Carrying Value - Present Value | 2,46,195 | ||
| Life is 5 Years | |||
| Amortisation in 1st Year using Straight line Method = (603,805/5) | 1,20,761 | ||
| Intangible Asset | Patent | ||
| Future Period | Cash Flow Projection | Present Value @ 8% | Discounted Cash Flow |
| Year 1 | 2,80,000 | 0.93 | 2,59,259 |
| Year 2 | 90,000 | 0.86 | 77,160 |
| Year 3 | 10,000 | 0.79 | 7,938 |
| Year 4 | - | 0.74 | - |
| Year 5 | - | 0.68 | - |
| Present Value of Estimated Cash Flow of Patent | 3,44,358 | ||
| Net Carrying Value | 4,00,000 | ||
| Impairement Loss = Net Carrying Value - Present Value | 55,642 | ||
| Life is 3 Years | |||
| Amortisation in 1st Year using Straight line Method = (344,358/3) | 1,14,786 | ||
| Intangible Asset | Trade Name | ||
| Future Period | Cash Flow Projection | Present Value @ 8% | Discounted Cash Flow |
| Year 1 | 8,00,000 | 0.93 | 7,40,741 |
| Year 2 | 6,10,000 | 0.86 | 5,22,977 |
| Year 3 | 5,90,000 | 0.79 | 4,68,361 |
| Year 4 | 5,10,000 | 0.74 | 3,74,865 |
| Year 5 | 3,65,000 | 0.68 | 2,48,413 |
| Present Value of Estimated Cash Flow of Trade Name | 23,55,357 | ||
| Net Carrying Value | 39,50,000 | ||
| Impairement Loss | -15,94,643 | ||
| Life is N/A | |||
| Amortisation in 1st Year is N/A | N/A | ||
| Journal Entry | Debit | Credit | |
| Impairement Loss A/c | 3,01,837 | ||
| Franchise | 2,46,195 | ||
| Patent | 55,642 | ||
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please help me to calculate question E12-4a. I have attached all
the information that I found...
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The following information concerns the intangible assets of Epstein Corporation: On June 30, 2021, Epstein completed...
The following information concerns the intangible assets of
Epstein Corporation:
On June 30, 2021, Epstein completed the acquisition of the
Johnstone Corporation for $1,880,000 in cash. The fair value of the
net identifiable assets of Johnstone was $1,600,000.
Included in the assets purchased from Johnstone was a patent
that was valued at $76,800. The remaining legal life of the patent
was 13 years, but Epstein believes that the patent will only be
useful for another eight years.
Epstein acquired a...
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Please Help!
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The following information concerns the intangible assets of
Epstein Corporation:
On June 30, 2021, Epstein completed the acquisition of the
Johnstone Corporation for $1,880,000 in cash. The fair value of the
net identifiable assets of Johnstone was $1,600,000.
Included in the assets purchased from Johnstone was a patent
that was valued at $76,800. The remaining legal life of the patent
was 13 years, but Epstein believes that the patent will only be
useful for another eight years.
Epstein acquired a...
how do I calculate the amortization expense on each
asset?
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