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    Alain Jerk Cassagnol
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    The document discusses impairment testing for several assets. It shows that a trademark with a book value of $30,000 and fair value of $16,667 calculated using a discount rate of 6% on cash flows of $1,000 per year should be impaired for $13,333. It also shows a goodwill asset with a book value of $150,000 and fair value of $301,040 calculated using a present value function, so there is no impairment. Finally, it shows a customer list asset with a book value of $20,000, amortization of $7,333 for the year, and undiscounted future cash flows exceeding the book value, so it is not impaired.

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    The document discusses impairment testing for several assets. It shows that a trademark with a book value of $30,000 and fair value of $16,667 calculated using a discount rate of 6% on cash flows of $1,000 per year should be impaired for $13,333. It also shows a goodwill asset with a book value of $150,000 and fair value of $301,040 calculated using a present value function, so there is no impairment. Finally, it shows a customer list asset with a book value of $20,000, amortization of $7,333 for the year, and undiscounted future cash flows exceeding the book value, so it is not impaired.

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    8 views2 pages

    Extra Credit

    Uploaded by

    Alain Jerk Cassagnol
    The document discusses impairment testing for several assets. It shows that a trademark with a book value of $30,000 and fair value of $16,667 calculated using a discount rate of 6% on cash flows of $1,000 per year should be impaired for $13,333. It also shows a goodwill asset with a book value of $150,000 and fair value of $301,040 calculated using a present value function, so there is no impairment. Finally, it shows a customer list asset with a book value of $20,000, amortization of $7,333 for the year, and undiscounted future cash flows exceeding the book value, so it is not impaired.

    Copyright:

    Attribution Non-Commercial (BY-NC)
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    Problem 11-64 Extra Credit

    a.)NO amortization expense, useful life is ongoing Book Value $30,000 Fair Value: Yearly Cash Flow $1,000 Discount Rate 0.06 $16,667 Book value $30,000,is greater than fair value $16,667 , therefore asset needs to be impaired Dec. 31 Impairment Loss ($30,000-$16,667) Trademark $13,333 $13,333

    b.)Estimated Fair Value Abacus (used pv function in Excel): ($301,039.54) $301,040 Net Book Reporting Value : $270,000 $150,000 $420,000 Total Assets $ (180,000) Total Liabilitles $ 240,000 Net BV Net Value is less than Fair Value, no impairment for goodwill, so computing the fair values of identifable assets and liabilitiesis unneccessary C.)Journal Entry for Amortization Expense: $22,000 Customer List Amt. 3 Years $7,333 Amortization Expense Dec. 31 Amortization Expense Accumulated Amortization Impairment Test: $ 22,000 $ (7,333) $ 14,667 Book Value $12,000 $8,000 $20,000 $7,333 $7,333

    Undiscounted future cash flows

    Book Value is less that undiscounted future cash flows so the asset cannot be impaired, and requires no journal entry.

    e impaired

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