Exam 12: Intangible Assets and Goodwill

On May 5, 2020, Samson Corp. exchanged 4,000 of its common shares for a copyright owned by Ingleton Ltd. At this date, Samson's common shares were quoted at $ 22 per share, and the copyright had a carrying value of $ 100,000 on Ingleton's books. Samson should record the copyright at

Acquisition of tangible and intangible assets Abe Manufacturing Corp. decided to expand further by purchasing the net assets of ERB Manufacturing Corp. ERB's statement of financial position at December 31, 2020 follows. An appraisal, agreed to by both parties, indicated that the fair value of the inventory was $ 320,000 and the fair value of the plant assets was $ 1,225,000. The fair value of the receivables and payables is equal to the amount reported on the balance sheet. The agreed purchase price was $ 3 million, and this amount was paid in cash to the owners of ERB Instructions Calculate the amount of goodwill (if any) implied in the purchase price of $ 3 million. Show calculations.

If the pattern in which an intangible asset's benefits will be used up CANNOT be determined, the amortization method most likely to be used is

Intangible assets and goodwill Explain the three main characteristics of intangible assets. Is goodwill an intangible asset? Why, or why not? Explain.

The cost of a patent should be amortized over its

Negative goodwill arises when

A change in the amortization rate for an intangible asset should be accounted for as a

Under IFRS, to determine if there is an impairment of goodwill, compare the

In 2020, Peterson Corporation incurred research costs as follows: Materials and supplies.......................................................... $\$ 60,000$ Personnel .....................................................................................65,000 Indirect costsmallocated......................................................... 80,000 $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $205,000 These costs relate to a product that Peterson expects to market in 2021. It is estimated that these costs will be recouped by December 31, 2023. How much of these costs could be capitalized in 2020?

All of the following are specifically identifiable intangible assets EXCEPT

Under ASPE, which of the following statements best describes the accounting for intangible assets after acquisition?

Which of the following statements best describes when previously recognized goodwill impairment may be reversed?

The reason that the revaluation model is NOT widely used for measuring intangible assets after initial recognition is that

A franchise or licence with a limited life is

Which of the following is correct regarding the rational entity impairment model?

Capitalization of R&D costs Carmanah Industries Ltd. Is a company in the high-technology industry. Carmanah has been working on developing a new solar panel technology. The technology meets all of the six criteria required in order to capitalize development costs. During 2020, Carmanah incurred the following costs related to research and development: Rent of facility Salaries of recearch staff Legal costs to obtain new patent for technology Legal costs of defending new patent in court 36,000 Materials consumed in manufacture of prototypes 13,100 Consulting fees paid for general research Indirect costs related to recearch and development 9,700 Instructions Calculate the amount that Carmanah would be allowed to capitalize as an intangible asset for 2020, assuming that Carmanah follows IFRS.

Journal entries for patent purchase CSI Products Ltd. purchased a patent on January 1, 2020, for $ 1,120,000. At the time of the purchase, the patent had a remaining legal life of 20 years. In January 2023, CSI spent $ 92,000 successfully defending the patent in court. One of the other results of the court case was the discovery that the patent would only have a remaining useful life of 9 years. CSI's year end was December 31. Instructions Prepare the entries on the books of CSI to record a) the purchase of the patent, b) the amortization for the first year (2020), c) the defence of the patent, and d) amortization for 2023.

In January, 2015, Tillicum Corp. purchased a patent for a new consumer product for $ 900,000. At the time of purchase, the patent was valid for 15 years. Due to the competitive nature of the product, however, the patent was estimated to have a useful life of only ten years. During 2020, the product was permanently removed from the market because of a potential health hazard. What amount should Tillicum recognize as an impairment loss for calendar 2020, assuming amortization has been recorded annually using the straight-line method with no residual value?

On January 1, 2016, Michigan Corp. purchased a trademark for $ 300,000, which had an estimated useful life of 15 years. In January 2020, Michigan paid $ 44,000 for legal fees in a successful defence of the trademark. The amortization expense for this asset for calendar 2020, should be

Use the following information for questions. Jeremiah Inc. is being targeted for acquisition by Argo Corporation. As an analyst for Argo, you are asked to determine the goodwill that, pending various assumptions, may be inherent in this potential transaction. The available information relating to Jeremiah includes the following: Current net aszete: $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\$5.1$ millien Expected return on net assets for industry: $\quad$$\quad$$\quad$$\quad$$10 \%$ Reported net income for the previous six consecutive years: YearAmount Year Amount 2015 \ 710,000 2018 \ 745,000 2016 \ 680,000 2019 \ 815,000 2017 \ 980,000 2020 \ 835,000 Net income for 2020 included a $ 200,000 gain from the sale of a discontinued operation. -Estimated goodwill by capitalizing average excess earnings at 14% is