Montana Matt's Golf Inc. was formed on July 1, 2011, when Matt Magilke purchased the Old Master Golf Company. Old Master provides video golf instruction at kiosks in shopping malls. Magilke plans to integrate the instructional business into his golf equipment and accessory stores. Magilke paid $770,000 cash for Old Master. At the time, Old Master's balance sheet reported assets of $650,000 and liabilities of $200,000 (thus owners' equity was $450,000). The fair value of Old Master's assets is estimated to be $800,000. Included in the assets is the Old Master trade name with a fair value of $10,000 and a copyright on some instructional books with a fair value of $24,000. The trade name has a remaining life of 5 years and can be renewed at nominal cost indefinitely. The copyright has a remaining life of 40 years.
(a) |
Prepare the intangible assets section of Montana Matt's Golf
Inc. at December 31, 2011. How much amortization expense is
included in Montana Matt's income for the year ended December 31,
2011? Show all supporting computations.
|
(b) |
Prepare the journal entry to record amortization expense for
2012. Prepare the intangible assets section of Montana Matt's Golf
Inc. at December 31, 2012. (No impairments are required to be
recorded in 2012.)
|
(c) |
At the end of 2013, Magilke is evaluating the results of the
instructional business. Due to fierce competition from online and
television (e.g., the Golf Channel), the Old Master reporting unit
has been losing money. Its book value is now $500,000. The fair
value of the Old Master reporting unit is $420,000. The implied
value of goodwill is $90,000. Magilke has collected the following
information related to the company's intangible assets.
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Montana Matt's Golf Inc. was formed on July 1, 2011, when Matt Magilke purchased the Old...
Kingbird Golf Inc. was formed on July 1, 2019, when Matt Magilke purchased the Old Master Golf Company. Old Master provides video golf instruction at kiosks in shopping malls. Magilke plans to integrate the instructional business into his golf equipment and accessory stores. Magilke paid $850,000 cash for Old Master. At the time, Old Master’s balance sheet reported assets of $650,000 and liabilities of $190,000 (thus owners’ equity was $460,000). The fair value of Old Master’s assets is estimated to...
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