Compute for the Impairment loss for 2020/ STARK INDUSTRIES reports the following patents on its December 31, 2019 statement of financialposition.Useful Life (at date ofacquisition)17 years10 years4 yearsInitial CostDate of AcquisitionMarch 1, 2016July 1, 2017September 1, 2018Patent A1,224,000.00Patent B450,000.00Patent C432,000.00The 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 costswere 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 isdue 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, 202160,000.00December 31, 2022December 31, 202360,000.0060,000.00The appropriate discount rate to be used for these cash flows is 8%. (Round of PV factors to 4decimal places)

An impairment loss is the amount by which an asset's or cash-generating unit's carrying value…

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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)

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