Various Intangible Assets and Impairment (Alternative is 8-54.) Consider the following: 1. On December 29, 20X1, a publisher acquires the paperback copyright for a book by Steven King for $3 million. Most sales of this book are expected to take place uniformly during 20X2 and 20X3. What is the amortization for 20X2? 2. In 20X1, Company C spent $6 million in its research department, which resulted in new valuable patents. In December 20X1, Company D paid $6 million to an outside inventor for some valuable new patents. How would the income statements for the year ended December 31, 20X1 for each company be affected? How would the balance sheets as of December 31, 20XI be affected? 3. On December 28, 20X8, Black Electronics Company purchased a patent for a calculator for $420,000. The patent has 10 years of its legal life remaining. Technology changes fast, so Black Electronics expects the patent to be worthless in 4 years. What is the amortization for 20X9? 4.

(a) During the fiscal year ending December 31, 20X3, Samela Corporation paid $10 million in cash for Haddock Company. At the time of the acquisition, the total assets of Haddock had a fair market value of $22 million and the total liabilities had a fair market value of $16 million. What journal entry would Samela Corporation make to record the acquisition of Haddock?

(b) On December 31, 20X4, Samela Corporation performed a review to determine if the goodwill recorded in the initial transaction had become impaired. The review indicated that the fair value of the goodwill was $3 million. Does Samela need to make a journal entry to recognize the impair- ment of goodwill? If so, prepare the entry.