8. H2mmer Corporation acquired all the assets and liabilities of New Corporation. New Cor·poration has a number of operating divisicns, including one whose major industry is the m<1nufacture of toy train, particularly those having historical significance. The toy trains divisicn :s regarded as a cc.sh-')enerating unit. In paying P20 mm;o!1 for the net assiO'ts of New Corporation, Hammer ca!cuiated that it had acquire(j goodwill of P2,400,000. The goodwill was allocated to eac!1 of the divisicns, and the assets and liabilities acquir~J are measured at fair value at ac~uisition date. At the er.d of the period, the carrying <~mounts of the assets of the toy train division were: Factory Inventory Brand -"Choochoo" Goodwill Total P2,500,000 1,500,000 500,000 500,000 ~A!QQ~Q!l There is a dedi11irrg interest iR toy t;-ains because of the aggressive marketing of computer-based toys, so the m::magement of Hammer measured the value in use of the toy train division a:: P4,230,000. Pa9(!5 of 24 www-DrtC.COm,pb P1.0pen:JstPB:JO.:J3
Practical Accounting 1 SETB The ca;rying amount of Brand -"Choochoo"' after allocating impairment loss, if any, is a. PSOO,OOO b. P470,000 c. P42:::,ooo d. PO 9. On January 1. 2011, 6ur.ny Inc. purchased a !Jatent with C'l cost P1,160,000, a useful life of 5 ye~rs. The company uses straight-line depreciation. At December 31, 2012, the con,pany determines that impai;...,.,.;:iit indicators are present. The fair value les::, cost to seil the patP.nt is estimated to be P540,000. The pater.!:'s value-in-use is estimated to be P565,uOQ. :-he asset's remaining useful life i~_e_stimated __ to b_e _ 2 years. --· ---· -----The company's 2013 income statement w!ll report amortization expense for the patent of 0. P232,0CO a. P595,000 10. On January 2, 2012, Meadow Inc. purchased a patent with a cost P940,000 a useful life of 4 years. At December 31, 2012, a11d December 31, 20!3, the company determ!nes that impairment indicators are present. The following informaticn is available for impairment testing at each year end: fair value less costs to sell Value-in-use 12/31/2012 12/31/2013 P71.S,OOC P420,000 P750,000 P445,000 No changes were made in the asset's estimated useful life. The company's 2013 income statement will report Page 6 of 24 on -~ VI .,.., PJ.OpenlstPB:Jn.J3 Pr-ctical Accounting 1 .;)CI D -. Cash in Bank -checking accour.t of 1L Con!;ider the rollow~ng~ of PSOO Post-dated chaks received P13,1~oop~~~ o;.,d a~ertificates ~f depcsit total::l9 P124,000~ tota .ng , , rted as cash in the statement o. How much should be !"epo -financial
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