PROBLEM 1

PROBLEM 2

1 INTEREST 8%
YR 0 YR 1 YR 2 Y3
64,800 60,000
69984 60,000
75583 60,000
210,367
PROBLEM 1
QUESTION 1
PATENT A
Initial cost 1,224,000
Amortization
2012 (1,224,000/10x 10/12) 102,000
2013-2015 (1,224,000x 3/10) 367,200 469,200 754,800

PATENT B
Initial cost 450,000
Amortization
2012 (1,224,000/10x 10/12) 28,125
2013-2015 (1,224,000x 3/10) 112,500 140,625 309,375

PATENT C
Initial cost 432,000
Amortization
2012 (1,224,000/10x 10/12) 28,800
2013-2015 (1,224,000x 3/10) 86,400 115,200 316,800
Total carrying value of patents, Dec. 31, 2016 1,380,975

QUESTION 2
PATENT B
Carrying value, Dec 31,2015 309,375
Less: 2017 amortization (450,000 x 1/8) 56,250
Carrying value, Dec 31,2016 253,125
Present value of future cash flows(60,000 x 1.875) 112,500
Impairment loss 140,625

QUESTION 3
PATENT A
Carrying value, Dec 31, 2015 754,800
Less: 2016 Amortization (1,224,000 x 1/10) 122,400 632,400
PATENT B 140,625
PATENT C
Carrying value, Dec 31, 2015 316,800
Less: 2016 Amortization (432,000 x 1/5) 86,400 230,400
PATENT D
Initial Cost (737,100 x 60%) 442,260 442,260
PATENT E
Initial Cost 900,000
Less: 2016 Amortization (900,000/10 X 9/12) 67,500 832,500
Total carrying value of patents, Dec. 31, 2016 2,278,185
PROBLEM 2

QUESTION 1
Patent 870,000
Less: Amortization (870,000/10) 87,000 783,000
Goodwill 720,000
Franchise 900,000
Less: Amortization (900,000/5 x 6/12) 90,000 810,000
Copyright 312,000
Less: Amortization (312,000/10 x 5/12) 13,000 299,000
Total carrying value, December 31, 2016 2,612,000

QUESTION 2
Patent 870,000
Less: Amortization (870,000/10) 87,000 783,000
Goodwill 720,000
Franchise 900,000
Less: Amortization (900,000/5 x 6/12) 90,000 810,000
Copyright 312,000
Less: Amortization (312,000/10 x 5/12) 13,000 299,000
Total carrying value, December 31, 2016 2,612,000