Question
Butler Corp. purchased a patent several years ago for $800,000. As of 12/31/18, amortization totaling $600,000 has already been recorded on the patent. At the
Butler Corp. purchased a patent several years ago for $800,000. As of 12/31/18, amortization totaling $600,000 has already been recorded on the patent.
At the end of 2018, Butler believes the future cash flows the patent will generate will equal $150,000. It also estimates the fair value of the patent to be $180,000.
How much of an impairment loss, if any, should Butler record in 2018 related to this patent?
A. $800,000
B. $200,000
C. $ 30,000
D. $ 20,000
E. $ 50,000
F. None. There is no impairment.
Hester Inc. paid $700,000 to purchase the net assets of Adam Corp. The following information regarding Adam Corp. is available at the time of purchase:
The book value of Adams identifiable net assets is $710,000
The fair value of Adams identifiable net assets is $770,000
In Hesters entry to record the purchase of Adam Corp., which of the following statements is true?
A. A gain of $70,000 should be recorded.
B. A loss of $70,000 should be recorded.
C. A gain of $10,000 should be recorded.
D. A loss of $10,000 should be recorded.
E. Goodwill of $70,000 should be recorded.
F. Goodwill of $10,000 should be recorded
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