Impairment of Assets and Intangible Assets

It is a fall in the market value of an asset so that the recoverable amount is now less than the carrying amount in the statement of financial position.

• Depletion

• Depreciation

• Revaluation

• Impairment

It is the present value or discounted value of future net cash flows expected to be derived from an asset.

• Recoverable Amount

• Value in Use

• Fair Value

• Cost of Disposal

What amount should be reported as impairment loss for the year?

• 1,500,000

• 2,000,000

• 500,000

• 0

At the beginning of the current year, JEZ Company acquired all the assets and liabilities of another entity. The acquiree has a number of operating divisions, including one whose major industry is the manufacture of toy train. The toy train division is regarded as a cash generating unit.

 

In paying 20,000,000 for the net assets of the acquiree. JEZ Company calculated that it had acquired goodwill of 2,400,000. The goodwill was allocated to each of the divisions, and the assets and liabilities acquired are measured at fair value at acquisition date. At year-end, the carrying amounts of the assets of the toy train division were:

 

Building 2,000,000, Inventory 1,500,000, Trademark 1,000,000, Goodwill 500,000 There is a declining interest in toy train because of the aggressive marketing of computer-based toys. The entity measured the value in use of the toy train division at year-end at 3,600,000.

What amount should be recognized as impairment loss on goodwill?

• 1,000,000

• 500,000

• 400,000

• 900,000

At the beginning of the current year, JEZ Company acquired all the assets and liabilities of another entity. The acquiree has a number of operating divisions, including one whose major industry is the manufacture of toy train. The toy train division is regarded as a cash generating unit.

 

In paying 20,000,000 for the net assets of the acquiree. JEZ Company calculated that it had acquired goodwill of 2,400,000. The goodwill was allocated to each of the divisions, and the assets and liabilities acquired are measured at fair value at acquisition date. At year-end, the carrying amounts of the assets of the toy train division were:

 

Building 2,000,000, Inventory 1,500,000, Trademark 1,000,000, Goodwill 500,000 There is a declining interest in toy train because of the aggressive marketing of computer-based toys. The entity measured the value in use of the toy train division at year-end at 3,600,000.

What amount should be recognized as impairment loss to be allocated to the building?

• 1,000,000

• 500,000

• 400,000

• 900,000

LADY Company operates a production line which is treated as a cash generating unit for impairment review purposes. At year-end, the carrying amounts of the noncurrent assets are as follows: Goodwill 1,100,000 and Machinery 2,200,000 The value in use of the production line is estimated at 2,700,000 at this time. What is the revised carrying amount of goodwill after recognition of impairment?

• 1,100,000

• 1,000,000

• 500,000

• 600,000

Gray Company was granted a patent on January 1,2018 and capitalized P450,000. The entity was amortizing the patent over the useful life of 15 years. During 2021, the entity paid P150,000 in successfully defending an attempted infringement of the patent. After the legal action was completed, the entity sold the patent to the plaintiff for P750,000. The policy is to take no amortization in the year of disposal. What amount should be reported as gain from sale of patent in 2021?

• 150,000

• 240,000

• 390,000

• 270,000

The following belongs in a one group, except

• Patent

• Copyright

• Trademark

• Franchise

What is the legal life of patent in the Philippines?

• 20 months

• 20 years

• 120 months

• 50 years

Cost of litigation and other legal fees of successfully defending the patent is treated as an

• asset

• liability

• income

• expense