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Compute for the Impairment loss for 2020 STARK INDUSTRIES reports the following patents on its December 31, 2019 statement of financial position. Initial Cost Useful
Compute for the Impairment loss for 2020 STARK INDUSTRIES reports the following patents on its December 31, 2019 statement of financial position. Initial Cost Useful Life (at date of Date of Acquisition acquisition) Patent A 1,224,000.00 March 1, 2016 17 years Patent B 450,000.00 July 1, 2017 10 years Patent 432,000.00 September 1, 2018 4 years The following events occurred during the year ended December 31, 2020. a. Research and development costs of P 737,100 were incurred during the year. These costs were incurred prior to projects achieving economic viability. b. Patent D was purchased on July 1 for P 855,000. It has a remaining life 9% years. c. A possible impairment of Patent B's value may have occurred at December 31, 2020. This is due to a significant reduction in the demands for certain products protected by Patent B. The company's controller estimates the following future cash flows from Patent B. December 31, 2021 60,000.00 December 31, 2022 60,000.00 December 31, 2023 60,000.00 The appropriate discount rate to be used for these cash flows is 8%. (Round of PV factors to 4 decimal places)
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