Intermediate accounting 2 Prepare the intangible assets section of Burr Oak Inc. at December 31, 2019. How much amortization expense is included in Burr Oak Inc.'s income for the year ended December 31, 2019? The entire question is split into 2 images the drop menu is: Accumulated amoritization-copyright accumulated amoritzation-goodwill accumulated amortization-trade name amortization expense* Amortization of copyright for 2019* amoritzation of trade name for 2019* carrying value-copyright copyright fair value of assets fair value of net assets goodwill less accumulated amortization less expected cash flows less fair value of liabilities less fair value of tade name loss on impairment trade names

Burr Oak Inc. was formed on July 1, 2019 when Walt Bernard purchased the Big Rock Motorbike company. Big Rock Motorbike organizes and provides motorbike tours along U.S. coastal areas. Bernard paid $450,000 cash for Big Rock Motorbike. At the time, Big Rock's balance sheet reported assets of $470,000 and liabilities of $300,000 (thus stockholders equity was $170,000). The fair value of Big Rock's assets is estimated to be $540,000. Included in the assets is the Big Rock Motorbike trade name with a fair value of $70,000 and a copyright on some tour books with a fair value of $40,000. The trade name has a remaining life of 10 years and can be renewed at nominal cost indefinitely. The copyright has a remaining life of 20 years. Instructions (a) Prepare the intangible assets section of Burr Oak Inc. at December 31, 2019. How much amortization expense is included in Burr Oak Inc.'s income for the year ended December 31, 2019? 40,000 Schedule 1 - Computation of Value of Freedom Rock Bicycles Copyright Cost of Copyright at date of purchase $ Less Amortization of Copyright for 2019* Carrying Value of Copyright on December 31, 2019 * Amortization = $40,000 / 20 years x 6/12 year = $1000 S 40,000 $ 450,000 Schedule 2 - Goodwill Measurement Purchase price Fair value of assets Less Fair value of liabilities Fair value of net assets Value Assiged to Goodwill $ 450,000 Schedule 3 - Computation of Value of Trade Name Purchase price $ 70,000 Amortization of trade name for 2019* Carrying Value of Trade Name on December 31, 2019 70,000 * No amortization for trade name since it is considered an indefinite life intangible $ BURR OAK INC Intangibles Section of Balance Sheet 43830 Tradename Copyright Goodwill $ $ $ 70,000 40,000 450,000 Total Intangibles $ 560,000 (b) Prepare the journal entry to record amortization expense for 2020. Prepare the intangible assets section of Burr Oak Inc. at December 31, 2020. (No impairments are required to be recorded in 2020.) Debit Credit * Amortization = $40,000/ 20 years = $2,000 (c) At the end of 2020, Bernard is evaluating the results of the tour business. Due to fierce competition from other online businesses, the Big Rock reporting unit has been losing money. Its book value is now $225,000. The fair value of the Big Rock reporting unit is $150,000. Bernard has collected the following information related to the company's intangible assets intangible assets: Intangible Asset Trademark Copyrights Expected Cash Flows (Undiscounted) $ 50,000 $ $ 26,000 $ Fair Values 16,000 14,000 Calculate impairment loss, if any, for each of the intangible assets. Trade name Calculate the impairment loss: Carrying value asset $ 70,000 Loss on Impairment Is there an impairment? *No amortization for trade name since it is considered an indefinite life intangible Copyright 40,000 Purchase Price $ $ Result Is there an impairment? Calculate the impairment loss: Carrying value asset Fair value of asset Loss on Impairment *Amortization = $40,000 / 20 years x 1.5 years = $3,000 $ Carrying value of goodwill Fair value of business unit Result Is there an impairment? Goodwill 225000 -150000 75000 (d) Prepare the journal entries required, if any, to record impairments on Burr Oak Inc.'s intangible assets. Debit Credit Burr Oak Inc. was formed on July 1, 2019 when Walt Bernard purchased the Big Rock Motorbike company. Big Rock Motorbike organizes and provides motorbike tours along U.S. coastal areas. Bernard paid $450,000 cash for Big Rock Motorbike. At the time, Big Rock's balance sheet reported assets of $470,000 and liabilities of $300,000 (thus stockholders equity was $170,000). The fair value of Big Rock's assets is estimated to be $540,000. Included in the assets is the Big Rock Motorbike trade name with a fair value of $70,000 and a copyright on some tour books with a fair value of $40,000. The trade name has a remaining life of 10 years and can be renewed at nominal cost indefinitely. The copyright has a remaining life of 20 years. Instructions (a) Prepare the intangible assets section of Burr Oak Inc. at December 31, 2019. How much amortization expense is included in Burr Oak Inc.'s income for the year ended December 31, 2019? 40,000 Schedule 1 - Computation of Value of Freedom Rock Bicycles Copyright Cost of Copyright at date of purchase $ Less Amortization of Copyright for 2019* Carrying Value of Copyright on December 31, 2019 * Amortization = $40,000 / 20 years x 6/12 year = $1000 S 40,000 $ 450,000 Schedule 2 - Goodwill Measurement Purchase price Fair value of assets Less Fair value of liabilities Fair value of net assets Value Assiged to Goodwill $ 450,000 Schedule 3 - Computation of Value of Trade Name Purchase price $ 70,000 Amortization of trade name for 2019* Carrying Value of Trade Name on December 31, 2019 70,000 * No amortization for trade name since it is considered an indefinite life intangible $ BURR OAK INC Intangibles Section of Balance Sheet 43830 Tradename Copyright Goodwill $ $ $ 70,000 40,000 450,000 Total Intangibles $ 560,000 (b) Prepare the journal entry to record amortization expense for 2020. Prepare the intangible assets section of Burr Oak Inc. at December 31, 2020. (No impairments are required to be recorded in 2020.) Debit Credit * Amortization = $40,000/ 20 years = $2,000 (c) At the end of 2020, Bernard is evaluating the results of the tour business. Due to fierce competition from other online businesses, the Big Rock reporting unit has been losing money. Its book value is now $225,000. The fair value of the Big Rock reporting unit is $150,000. Bernard has collected the following information related to the company's intangible assets intangible assets: Intangible Asset Trademark Copyrights Expected Cash Flows (Undiscounted) $ 50,000 $ $ 26,000 $ Fair Values 16,000 14,000 Calculate impairment loss, if any, for each of the intangible assets. Trade name Calculate the impairment loss: Carrying value asset $ 70,000 Loss on Impairment Is there an impairment? *No amortization for trade name since it is considered an indefinite life intangible Copyright 40,000 Purchase Price $ $ Result Is there an impairment? Calculate the impairment loss: Carrying value asset Fair value of asset Loss on Impairment *Amortization = $40,000 / 20 years x 1.5 years = $3,000 $ Carrying value of goodwill Fair value of business unit Result Is there an impairment? Goodwill 225000 -150000 75000 (d) Prepare the journal entries required, if any, to record impairments on Burr Oak Inc.'s intangible assets. Debit Credit