Question
Intangible Assets and Goodwill: Amortization and Impairment In early 2011, Bowen Company acquired a new business unit in a merger. Allocation of the acquisition cost
Intangible Assets and Goodwill: Amortization and Impairment
In early 2011, Bowen Company acquired a new business unit in a merger. Allocation of the acquisition cost resulted in fair values assigned as follows:
Intangible Asset | Fair Value | Estimated Value |
---|---|---|
Customer lists | $300,000 | 5 years |
Developed technology | 480,000 | 10 years |
Internet domain name | 780,000 | Indefinite |
Goodwill* | 3,720,000 | Indefinite |
* The goodwill is assigned entirely to the aquired business unit.
Impairment reviews at the end of 2011 and 2012 did not identify any impairment losses. After the business suffered a downturn during 2013, the year-end impairment review yielded the following information:
- Customer lists are estimated to have undiscounted future cash flows of $150,000 and discounted future cash flows of $108,000.
- Developed technology is estimated to have undiscounted future cash flows of $300,000 and discounted future cash flows of $252,000.
- The internet domain name is estimated to have undiscounted future cash flows of $600,000 and discounted future cash flows of $450,000.
- Because of the economic downturn, Bowen bypassed qualitative assessment of the business unit. The acquired business unit has a fair value of $10,200,000, and a carrying amount of $11,000,000.
Determine Bowen's amortization expense and impairment write-offs for 2013.
Summary: | |
---|---|
Amortization expense for 2013: | |
Customer lists | Answer |
Developed technology | Answer |
Total | Answer |
Impairment writeoffs for 2013: | |
AnswerDeveloped technologyCustomer listsN/A | Answer |
Internet domain name | Answer |
Goodwill | Answer |
Total | Answer |
Please provide answer in spots that say "answer" Show all work. Thank you!!!
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