Question

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Sage Hill Industries has the following patents on its December 31, 2019, balance sheet. Patent Initial Date Useful Life at Date Item Cost Acquired Acquired Patent A $43,860 3/1/16 17 years Patent B $16,800 7/1/17 10 years Patent C $21,600 9/1/18 4 years The following events occurred during the year ended December 31, 2020. 1. Research and development costs of $245,000 were incurred during the year. 2. Patent was purchased on July 1 for $40,470. This patent has a useful life of 9/2 years. 3. As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent B's value may have occurred at December 31, 2020. The controller for Sage Hill estimates the expected future cash flows from Patent B will be as follows. Year Expected Future Cash Flows 2021 $2,100 2022 2,100 2023 2,100 The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year.)

Answer 1

total carrying amount on 31december 2019 = 60970

Patent Mane Patent A Initial Cost a) 143860 Date actured usefull life at date acquired 103/01/16 co) 7 useful No of Month amortization axel Carrying life inmonths fill dec 2019 till dec 2019. (da 5x12) le- dec 2019 - B value of dec 2010 g=a.1 2004 146 198/90 33970 I Patent B 116800 /10 120 30 14200 12 600 mus Patent & 21600 (07/01/18. 17200 09 48 14400 Total 60970