Question

eBook A Prin Question 2 incorrect Mark 0.00 out of 200 P Flag question Determining Carrying Value and Amortization of Intangible Assets Review the following information pertaining to Denzel Company, 1. A patent was purchased on January 2, 2018, for $104,000 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 2. On January 1, 2020, Denzel Company purchased a second patent for $128,000 cash. At January 1, 2020, 6 years of the patent's legal Wife of 20 years had already expired. 3. On June 30, 2020, Denzel Company paid a firm $12,800 for a new trademark. Denzel considers the life of the trademark to be indefinite. 4. On November 1, 2020, Denzel Company acquired all noncash assets and assumed all liabilities of Lee Company at a cash purchase price of $192,000. Denzel determined that the fair value of the identiable net assets acquired in the transaction is $187,200. Note: When answering the following questions, do not round until your final answer. Round your final answer to the nearest whole number, Required 1. What is the carrying value of intangible assets on December 31, 2020? Assume no impairment losses were recognized in prior periods. $ 9.142.85 X b. What is amortization expense for 2020? Check INCOTEC Marks for this submission: 0.0012.00

Answer 1

a. Carrying value of intangible asset on December 2020 = $212290

b. Amortization expenses for 2020 = $24310

Working Note

Calculation of Carrying value and amortization
	Patient 1	Patient 2	Trademark	Goodwill	Total
Written down value/carrying value on 01 January 2020	$    91,000.00	$                   -	$                 -	$               -	$          91,000
Add: Purchased/acquisition during the year	$                   -	$ 128,000.00	$ 12,800.00	$ 4,800.00	$        145,600
	$    91,000.00	$ 128,000.00	$ 12,800.00	$ 4,800.00	$        236,600
Less: amortization during the year	$    15,166.67	$      9,142.86	$                 -	$               -	$          24,310
Less: Impairment Loss	$                   -	$                   -	$                 -	$               -	$                   -
Written down value/carrying value on 31 December 2020	$    75,833.33	$ 118,857.14	$ 12,800.00	$ 4,800.00	$        212,290

Summary of information available
	Patient 1	Patient 2	Trademark	Goodwill
Purchase/acquisition date	2-Jan-18	1-Jan-20	30-Jun-20	1-Nov-20
Useful life at the time of Purchase/acquisition (in Years)	16	14	Indefinite	Indefinite
Value at the time of Purchase/acquisition date	$ 104,000.00	$ 128,000.00	$ 12,800.00	$ 4,800.00
Less: amortization till 31 December 2019	$    13,000.00	$                   -	$                 -	$               -
Written down value/carrying value on 01 January 2020	$    91,000.00	$                   -	$                 -	$               -
Revised Useful life left on 01 January 2020 (years)	6
Note: Trademark and Goodwill need to be tested for impairment loss as per IFRS.

As per IFRS, whenever entity acquire any business then excess consideration paid over fair value of net identifiable asset shall be considered as goodwill.