Problem 1. The following information is available for Barkley Company's patents:
Cost $1,720,000
Carrying amount 860,000
Expected future net cash flows 800,000
Fair value 640,000
Barkley would record a loss on impairment of
A.) $1,080,000.
B.) $220,000.
C.) $160,000.
D.) $60,000.
Problem 2. Blue Sky Company's 12/31/08 balance sheet reports assets of $5,000,000 and liabilities of $2,000,000. All of Blue Sky's assets' book values approximate their fair value, except for land, which has a fair value that is $300,000 greater than its book value. On 12/31/08, Horace Wimp Corporation paid $5,100,000 to acquire Blue Sky. What amount of goodwill should Horace Wimp record as a result of this purchase?
A.) -0-
B.) $100,000
C.) $1,800,000
D.) $2,100,000
Problem 3. During 2007, Leon Co. incurred the following costs:
Testing in search for process alternatives $ 350,000
Costs of marketing research for new product 250,000
Modification of the formulation of a process 510,000
Research and development services performed by Beck Corp. for Leon 325,000
Problem 4. In Leon's 2007 income statement, research and development expense should be
A.) $510,000.
B.) $835,000.
C.) $1,185,000
D.) $1,435,000.