Problem 12-6 - 23,100 Goodwill 170,000 Total intangibles...

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A. The various intangibles purchases are: Trade name 10,000 Copyright 24,000 Goodwill 170,000 Goodwill Computation: Fair value of assets 800,000 Fair value of liabilities (200,000) Fair Value of net assets 600,000 Purchase Price 770,000 Goodwill to be reported 170,000 Trade name can be renewed indefinitely and so has perpetual life and will not be amortized Goodwill is not amortized but tested for impairment Copyright has a remaining life of 40 years Amortization Expense - Copyright 300 (24,000/40)*6/12 Montana Matt's Golf Inc. Balance Sheet (partial) Dec 31,2009 Intangible Assets Trade name $10,000 Copyright (net accumulated amortization of $300) 23,700 Goodwill 170,000 Total intangibles $203,700 B. In 2010, there will be a full year amortization of copyright Amortization of copyright (24,000/40years) 600 Journal Entry 12/31/2010 Amortization Expense - Copyright Copyright Montana Matt's Golf Inc. Balance Sheet (partial) Dec 31,2010 Intangible Assets Trade name $10,000 Copyright (net accumulated amortization of $750)
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Unformatted text preview: 23,100 Goodwill 170,000 Total intangibles $203,100 C. Trade name Impairment Test Carrying amount of Trade name 10,000 Fair value of Trade name 3,000 Loss on impairment 7,000 Copyright Recoverability Test Carrying amount of Copyright 22,500 Expected future cash flows 30,000 Since the expected future net cash flows are more than the carrying amount, no impairment loss needs to Goodwill Impairment Test Fair Value of Old Master Reporting 420,000 Carrying amount of Net Assets 500,000 Since fair value of Old Master is less than the carrying amount of the new assets, impairment needs to be Carrying amount of Goodwill 170,000 Implied value of Goodwill 90,000 Loss on Impairment of Goodwill 80,000 Journal Entries 12/31/2011 Loss on impairment of Trade name Trade name 12/31/2011 Loss on impairment of Goodwill Goodwill Dr. Cr. 600 600 to be calculated. e determined. 7,000 7,000 80,000 80,000...
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This note was uploaded on 05/01/2011 for the course FINANCE 516 taught by Professor Anderson during the Spring '11 term at Keller Graduate School of Management.

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Problem 12-6 - 23,100 Goodwill 170,000 Total intangibles...

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