Hardnosed Equipment purchased a patent on October 1, 2006, for $150,000 plus $10,000 in legal fees....

80.2K

Verified Solution

Question

Accounting

Hardnosed Equipment purchased a patent on October 1, 2006, for$150,000 plus $10,000 in legal fees. At the time, HardnosedEquipment planned to use the patent for 10 years and then sell itfor $40,000.
At the end of 2008, Hardnosed Equipment estimated that theundiscounted net cash flows from the patent would be $110,000 andthe discounted cash flow, $95,000. The fair value of the patent onDecember 31, 2008 was $96,000.
Required:
1. Compute the 2006 and 2007 amortization for the patent usingthe straight-line method.
2. Determine if the patent is impaired on December 31, 2008 and,if impaired, the size of the loss. Explain the test forimpairment.
3. How would your answer to Required 2 differ if the patent hadnot been amortized by Hardnosed Equipment.

Answer & Explanation Solved by verified expert

4.5 Ratings (965 Votes)

1 Patent cost Cost price Legal fees 150000 10000 160000 Salvage value 40000 and useful life 10 years Amortization as per straight lline method Cost salvage value useful life Amortization amount per year 160000 40000 10 12000 2016 Amortization 3 months 12000 3 12 3000 2017 Amortization 12 months 12000 2 Carrying amount of patent on See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Hardnosed Equipment purchased a patent on October 1, 2006, for $150,000 plus $10,000 in legal fees....

80.2K

Verified Solution

Question

Accounting

Answer & Explanation Solved by verified expert

Get Answers to Unlimited Questions

Membership Benefits:

Other questions asked by students

Table 3 Mitosis in Normal Chicken Stomach Cells Phase of Total of Cell Mitosis of...

same thickness The peripheries of the two dis system taking center of large disc at...

In a container air is filled and maintained at temperature To Inner surface of walls...

Larry, Simone, Kim, Eduardo, lan, Sergio, Sarah, and Jim have all been invited to a...

6 14 If f x A 1 x 1 x 1 y 1 y y...

Find all angles O deg C 360 deg that satisfy the equation below to the...

the the rules for multiplication and or division of measurements to evaluate Round your answer...

Data table The contribution margin income statement of Too Sweot Donuts for August 2024 follows...

This is a step in a process that is the slowest compared to the other...

enter in "0". Winding Department Direct Materials and Conversion Equivalent Units of Production For...

SAVING STRATEGIES What is your saving strategy for your emergency fund or to meet financial...

Early the next day, the bank invests $50 million of its excess reserves in commercial...