Montana Matt's Golf Inc. was formed on July 1, 2016, when Matt Magilke purchased the Old Master

Question:

Montana Matt's Golf Inc. was formed on July 1, 2016, when Matt Magilke purchased the Old Master Golf Company. Old Master provides video golf instruction at kiosks in shopping malls. Magilke plans to integrate the instructional business into his golf equipment and accessory stores. Magilke paid $770,000 cash for Old Master. At the time, Old Master's reported assets of $650,000 and liabilities of $200,000 (thus owners' equity was $450,000). The fair value of Old Master's assets is estimated to be $800,000. Included in the assets is the Old Master trade name with a fair value of $10,000 and a copyright on some instructional books with a fair value of $24,000. The trade name has a remaining life of 5 years and can be renewed at nominal cost indefinitely. The copyright has a remaining life of 40 years.
Instructions
(a) Prepare the section of Montana Matt's Golf Inc. at December 31, 2016. How much amortization expense is included in Montana Matt's income for the year ended December 31, 2016? Show all supporting computations.
(b) Prepare the journal entry to record amortization expense for 2017. Prepare the section of Montana Matt's Golf Inc. at December 31, 2017. (No impairments are required to be recorded in 2017.)
(c) At the end of 2018, Magilke is evaluating the results of the instructional business. Due to fierce competition from online and television (e.g., the Golf Channel), the Old Master reporting unit has been losing money. Its book value is now $500,000. The fair value of the Old Master reporting unit is $420,000. The implied value of is $90,000. Magilke has collected the following information related to the company's .

Prepare the journal entries required, if any, to record impairments on Montana Matt's intangible assets. (Assume that any amortization for 2018 has been recorded.) Show supporting computations.

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