intangibles are 35) The cost of purchasing patent rights for a product that
might otherwise have seriously competed with one of the purchaser's
patented products should be 36) Riser Corporation was granted a patent
on a product on January 1, 1998. To protect its patent, the corporation
purchased on January 1, 2007 a patent on a competing product which
was originally issued on January 10, 2003. Because of its unique plant,
Riser Corporation does NOT feel the competing patent can be used in
producing a product. The cost of the competing patent should be 37)
Twilight Corporation acquired End-of-the-World Products on January 1,
2008 for $2,000,000, and recorded goodwill of $375,000 as a result of
that purchase. At December 31, 2008, the End-of-the-World Products
Division had a fair value of $1,700,000. The net 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