identifiable assets of the Division (excluding goodwill) had a fair
value of $1,450,000 at that time. What amount of loss on impairment
of goodwill should Twilight record in 2008?
38) Fleming Corporation acquired Out-of-Sight Products on January
1, 2008 for $4,000,000, and recorded goodwill of $750,000 as a result
of that purchase. At December 31, 2008, the Out-of-Sight Products
Division had a fair value of $3,400,000. The net identifiable assets of
the Division (excluding goodwill) had a fair value of $2,900,000 at
that time. What amount of loss on impairment of goodwill should
Fleming record in 2008?
39) Malrom Manufacturing Company acquired a patent on a
manufacturing process on January 1, 2006 for $10,000,000. It was
expected to have a 10 year life and no residual value. Malrom uses
straight-line amortization for patents. On December 31, 2007, the
expected future cash flows expected from the patent were expected to
be $800,000 per year for the next eight years. The present value of
these cash flows, discounted at Malrom’s market interest rate, is
$4,800,000. At what amount should the patent be carried on the
December 31, 2007 balance sheet?
40) Goodwill
41) Easton Company and Lofton Company were combined in a
purchase transaction. Easton was able to acquire Lofton at a bargain
price. The sum of the market or appraised values of identifiable assets
acquired less the fair value of liabilities assumed exceeded the cost to
Easton. After revaluing noncurrent assets to zero, there was still some
"negative goodwill." Proper accounting treatment by Easton is to
report the amount as
42) The reason goodwill is sometimes referred to as a master
valuation account is because
43) Which of the following items is a current liability?
44) Which of the following statements is false?
45) Stock dividends distributable should be classified on the
46) Simson Company has 35 employees who work 8-hour days and
are paid hourly. On January 1, 2006 the company began a program of
granting its employees 10 days of paid vacation each year. Vacation
days earned in 2006 may first be taken on January 1, 2007.
Information relative to these employees is as follows: