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Computing Impairment of Intangible Assets

Stiller Company had the following information for its three intangible assets.

Patent: A patent was purchased for $$140,000$ on June $30$ of Year $1$; Stiller estimated the useful life of the patent to be $15$ years. On

December $31$ of Year $3,$ the estimated future cash flows attributed to the patent were $$119,000.$ The fair value of the patent was

$$105,000.$

Trademark: A trademark was purchased for $$7,000$ on August $31$ of Year $2.$ The trademark is considered to have an indefinite life.

The fair value of the trademark on December $31$ of Year $3$ is $$3,500.$

Goodwill: Stiller recorded goodwill in January of Year $2,$ related to a purchase of another company. The carrying value of goodwill is

$$42,000$ on December $31$ of Year $3.$ On December $31$ of Year $3,$ the segment for which the goodwill relates had a fair value of

$$812,000.$ The book value of the net assets of the segment $($including goodwill$)$ is $$840,000.$

a$.$ Classify each of the intangible assets above as a finite life intangible or an indefinite life intangible.

b$.$ Determine the carrying value of each intangible asset on December $31$ of Year $3,$ prior to testing for impairment. Assume that the

company uses the straight$-$line method to amortize intangible assets, and no impairment was reported prior to Year $3.$

Note: Round each of your answers to the nearest whole dollar.

c$.$ Test each asset for impairment assuming that the qualitative assessment indicated that further impairment testing was warranted.

Determine the carrying value of each asset on December $31$ of Year $3$ after impairment testing.

Note: Round each of your answers to the nearest whole dollar.

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