Question

Sage Hill Golf and Sports was formed on July 1, 2020, when Steve Powerdriver purchased Old Master Golf Corporation. Old Master provides video golf instruction at kiosks in shopping malls. Powerdriver’s plan is to make the instruction business part of his golf equipment and accessory stores. Powerdriver paid $630,000 cash for Old Master. At the time of purchase, Old Master’s statement of financial position reported assets of $530,000 and liabilities of $100,000 (shareholders’ equity was $430,000). The fair value of Old Master’s identifiable assets was estimated to be $690,000. Included in the identifiable assets was the Old Master trade name with a fair value of $15,000 and a copyright on some instructional books with a fair value of $26,000. The trade name had a remaining legal life of five years and can be renewed indefinitely at nominal cost. The copyright had a remaining life of 40 years.

Assume that Sage Hill Golf and Sports is a private company reporting under ASPE.

Prepare the intangible assets section of Sage Hill Golf and Sports at December 31, 2020. (Round answers to 0 decimal places, e.g. 5,275.)

Sage Hill Golf and Sports INTANGIBLES AND GOODWILL SECTION OF STATEMENT OF FINANCIAL POSITION                                                                       December 31, 2020For the Year Ended December 31, 2020For the Month Ended December 31, 2020
		$

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How much amortization expense is included in Sage Hill’s income for the year ended December 31, 2020? (Round answer to 0 decimal places, e.g. 5,275.)

Amortization expense

$Enter your answer in accordance to the question statement

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Prepare the journal entry to record the amortization expense for 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

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Prepare the intangible assets section of Sage Hill Golf and Sports at December 31, 2021. (No impairment needs to be recorded in 2021.) (Round answers to 0 decimal places, e.g. 5,275.)

Sage Hill Golf and Sports INTANGIBLES AND GOODWILL SECTION OF STATEMENT OF FINANCIAL POSITION                                                                       December 31, 2021For the Year Ended December 31, 2021For the Month Ended December 31, 2021
		$

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List of Accounts

  

  

At the end of 2022, Powerdriver is evaluating the results of the instructional business. Due to fierce competition from Internet sites and television, the Old Master reporting unit has been losing money and has a carrying amount (including goodwill) of $430,000 and fair value (including goodwill) of $407,000.

Powerdriver has collected the following information about the company’s intangible assets:

Intangible Asset		Expected Cash Flows (Undiscounted)		Fair Value
Trade name		$11,000		$8,000
Copyright		31,000		26,000

Prepare the required journal entries, if any, to record impairment on Sage Hill’s intangible assets. (Assume that amortization for 2022 has been recorded.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

Answer 1

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