Question
At the beginning of 2011, Metatec Inc. acquired Ellison Technology Corporation for $580 million. In addition to cash, receivables, and inventory, the following assets and
At the beginning of 2011, Metatec Inc. acquired Ellison Technology Corporation for $580 million. In addition to cash, receivables, and inventory, the following assets and their fair values were also acquired:
Plant and equipment (depreciable assets) | $ | 148 | million |
Patent | 38 | million | |
Goodwill | 100 | million |
The plant and equipment are depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The patent is estimated to have a 5-year useful life, no residual value, and is amortized using the straight-line method. | ||||||||||||||||||||||||||||||||||||||||||
At the end of 2013, a change in business climate indicated to management that the assets of Ellison might be impaired. The following amounts have been determined:
*After first recording any impairment losses on plant and equipment and the patent.
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