Question

Iconix Brand Group owns and markets various brands and trademarks, including Joe Boxer, London Fog, Ocean Pacific, Ecko Unltd., Umbro, Ed Hardy, Lee Cooper, Buffalo, and Peanuts. The company's financial statements for the year ended December 31, 2015, indicate the following totals for these trademarks (in millions): 2014 2015 Trademarks (at cost) $1,703 $2,016 Accumulated Amortization 20 7 1,696 1,996 Trademarks, net During 2015, Iconix acquired the Strawberry Shortcake and Pony trademarks at a cost of $89 million, recorded $3 million of trademark amortization for the year, and disposed of trademarks for proceeds of $3 million cash. Assume none of the trademarks were judged to be impaired during the year. Required: Based on the information given, determine the following for trademarks disposed of during 2015: (a) their cost, (b) their accumulated amortization at the time of disposal, and (c) the gain (loss) on disposal of trademarks. (Enter your answer in millions not in dollars. Loss amounts should be indicated by minus sign.) (a) Cost disposed during 2015 (b) Accumulated Amortization (c) Gain (loss) on disposal of trademarks

Answer 1

Accumulated amortization

Trademarks (Accumulated amortization on trademarks disposed) (Balancing figure)	16	Beginning balance	20
Ending balance	7	Amortization expense	3
	23		23

Trademarks

Beginning balance	2,016	Accumulated amortization	16
Cash (Purchase of trademarks)	89	Cash (disposal of trademarks)	3
		Loss on disposal of trademarks (Balancing figure)	383
		Ending balance	1,703
	2,105		2,105

Cost price of trademarks disposed = Cash proceeds from disposal + Accumulated amortization + Loss on disposal of trademarks

= 3 + 16 + 383

= $402 million

a	Cost disposed during 2015	$402 million
b	Accumulated amortization	$16 million
c	Loss on disposal of trademarks	$383 million

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