Question

Question 7 of 9 < > 0/13 View Policies Show Attempt History Current Attempt in Progress Kingbird Industries has the following patents on its December 31, 2019, balance sheet. Patent Item Initial Cost Date Acquired Useful Life at Date Acquired Patent A $45,288 3/1/16 17 years Patent B $17,640 7/1/17 10 years Patent C $24.960 9/1/18 4 years The following events occurred during the year ended December 31, 2020. 1. Research and development costs of $252,000 were incurred during the year. 2. Patent D was purchased on July 1 for $48,450. This patent has a useful life of 91/2 years. 3. As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent's value may have occurred at December 31, 2020. The controller for Kingbird estimates the expected future cash flows from Patent B will be as follows.

Answer 1

Answer is attached below

I tried by best to get the answers

Answer (a) Patent Initial Cost Date Acquired Useful Life Useful No. of Months Amortization Carrying at Date Life in Till Dec, 31, till Dec 31, Value as at Acquired Months 2019 2019 Dec 31, 2019 d=c*12 f=a*(e/d) g=a-f a b с e 17 204 46 45,288 17,640 24,960 03-01-16 07-01-17 10 120 Patent A Patent B Patent C Total 30 10,212 4,410 8,320 35,076 13,230 16,640 64,946 09-01-18 4 48 16 Answer (b) Patent Initial Cost Date Acquired Useful Life Useful No. of Months Amortization Carrying Carrying at Date Life in Till Dec, 31, till Dec 31, Value as at Impairment Value as at Acquired Months 2020 2020 Dec 31, 2020 Loss Dec 31, 2020 before after Impairment Impairment d=c*12 f=a*ſe/d) g=a-f h I =g-h a b с e 03-01-16 17 204 58 Patent A Patent B Patent C 07-01-17 10 120 42 6,312 45,288 17,640 24,960 48,450 12,876 6,174 14,560 2,550 09-01-18 4 48 28 32,412 11,466 10,400 45,900 100,178 32,412 5,154 10,400 45,900 93,866 07-01-20 9.5 114 6 Patent D Total

Calculation of Impairment Loss on Patent B Year Expected Discount Present Cash Flow Factor @ 8% Value 2021 2,000 0.92593 1,852 2022 2,000 0.85734 1,715 2023 2,000 0.79383 1,588 5,154 Carrying Value of Patent B before impairment 11,466 Impairment 6,312 Answer a Answer b 64,946 93,866