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1. SMB Inc. acquired a patent for $27,000,000 at which time the remaining legal life was 20 years and the estimated benefit period was 18
1. SMB Inc. acquired a patent for $27,000,000 at which time the remaining legal life was 20 years and the estimated benefit period was 18 years. After 10 years, sales of the patented product began declining significantly and the net cash flows associated with the patents are now estimated at $1,300,000 per year for the next 3 years. The company uses a discount rate of 7% to analyze impairment. Calculate the amount of impairment. After recording impairment, what is the new cost basis of the patent.
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