Need E12-4 AND 12-5

OR E12-4. Finite-Life and Indefinite-Life Intangible Assets Impairment. SMC Research Associates reports the fol lowing intangible assets on its December 31 balance sheet: Intangible Asset Franchise Patent Trade name Total Net Carrying Value $ 850,000 400,000 3,950,000 $5,200,000 Remaining Life 5years 3years NIA It does not use a separate accumulated amortization account for the intangible assets (ie.. it deducts the amount of amortization directly from the intangible asset account). Long-Term Operating Assets Departures from Historical Cost 711 Management provided the following infonation related to intangible assets itobtained during the current year Franchise Due to current market conditions, products sold under the franchise have experienced signifi cant sales declines from possible obsolescence Patent. SMC is currently involved in litigation Ibat will determine whether the company has the exclusive right to sell the patented product Legal counselinfomed SMC that the value of the patent will likely be reduced Trade name. The company is required totest for imprinnent of its indefinite-life intangible assets annually SMC's cost of capital is6% Management estimates the following future cash flows to be generated over the next 5 years from the use of its intangible assets: Patent $280,000 90.000 Future Period Year Year2 Year Yeach Years Total Franchise $300.000 220,000 110.000 45,000 25,000 $700.000 10,000 TradeName $ 800.000 610,000 590,000 510,000 365,000 $2,875,000 0 $380,000 Required a Compute the impairment loss (if any) for each intangible asset. b Prepare thejournal ently necessary forecord the impairment loss Assuming that SMC amortizes its Intelte intangible assets using the straight line method with no sorap value prepare thejournal entry forecord the annual amortization for the first your subsequent to the impairment write down E12S Goodwill Impairment. Briget Company pay $1560.000 to acquire 100% of the common stock of Comish Incoporated. It assumes that Comisslom assets (such as the factory building and tand) are undervalued by $40,000 The historical cost of the net assets Boquired, excluding goodwil, is equal to $1,500,000 Cornish will be held as a division of Brigatti. The following infonation is available 1 year after the acquisition of the subsidiary company i.e. the reporting unit) 0 Description Debit Credit Cash $ 200,000 Inventory 300,000 Property, pant and equipment net 1,500,000 Goodwil 20.000 Current liablites $ 400,000 Common stock no pai 340,000 Retained earnings J.280.000 Totals $2,020,000 $2 020,000 Brigatti estimated the fair (appiaisal) value of the division's net assets (excluding goodwil) 1 year after the date of acquisition at $1.605,600 Required a. Compute goodwill recorded on the date of acquisition b Determine whether goodwill is impaired assuming that the fair value of the Cornish Division with good will 1 year after acquisition is equal to$2.000.000. Provide the impainnent journal entry, if needed c Determine whether goodwill is impaired assuming thatthe fair value of the Cornish Division with good year after acquisitionis equal to$1.608.000 Piepare the impairmentjoumal entry, if needed