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INDUSTRIES reports the following patents on its December 31, 2019 statement of financial Useful Life (at date of acquisition) 17 years 10 years 4 years Initial Cost Date of Acquisition March 1, 2016 July 1, 2017 September 1, 2018 1,224,000.00 B 450,000.00 432,000.00

INDUSTRIES reports the following patents on its December 31, 2019 statement of financial Useful Life (at date of acquisition) 17 years 10 years 4 years Initial Cost Date of Acquisition March 1, 2016 July 1, 2017 September 1, 2018 1,224,000.00 B 450,000.00 432,000.00

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Compute for the Impairment loss for 2020/

STARK INDUSTRIES reports the following patents on its December 31, 2019 statement of financial position. Useful Life (at date of acquisition) 17 years 10 years 4 years Initial Cost Date of Acquisition March 1, 2016 July 1, 2017 September 1, 2018 Patent A 1,224,000.00 Patent B 450,000.00 Patent C 432,000.00 The following events occurred during the year ended December 31, 2020. a. Research and development costs of P 737,100 were incurred during the year. These costs were incurred prior to projects achieving economic viability. b. Patent D was purchased on July 1 for P 855,000. It has a remaining life 9% years. c. A possible impairment of Patent B's value may have occurred at December 31, 2020. This is due to a significant reduction in the demands for certain products protected by Patent B. The company's controller estimates the following future cash flows from Patent B. December 31, 2021 60,000.00 December 31, 2022 December 31, 2023 60,000.00 60,000.00 The appropriate discount rate to be used for these cash flows is 8%. (Round of PV factors to 4 decimal places)
Transcribed Image Text:STARK INDUSTRIES reports the following patents on its December 31, 2019 statement of financial position. Useful Life (at date of acquisition) 17 years 10 years 4 years Initial Cost Date of Acquisition March 1, 2016 July 1, 2017 September 1, 2018 Patent A 1,224,000.00 Patent B 450,000.00 Patent C 432,000.00 The following events occurred during the year ended December 31, 2020. a. Research and development costs of P 737,100 were incurred during the year. These costs were incurred prior to projects achieving economic viability. b. Patent D was purchased on July 1 for P 855,000. It has a remaining life 9% years. c. A possible impairment of Patent B's value may have occurred at December 31, 2020. This is due to a significant reduction in the demands for certain products protected by Patent B. The company's controller estimates the following future cash flows from Patent B. December 31, 2021 60,000.00 December 31, 2022 December 31, 2023 60,000.00 60,000.00 The appropriate discount rate to be used for these cash flows is 8%. (Round of PV factors to 4 decimal places)
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