Question

You are examining the financial statements of a company. You observe patent amortization of $1,5 million and a loss on impairment of goodwill for $25 million.

(a) Describe hoe the accountants arrived at these amounts

(b) Interpret any information content provided by these disclosures

Answer 1

ANSWER:

(a). Describe hoe the accountants arrived at these amounts

• To an accountant to discover the measure of patent amortization, first should discover the underlying expense of getting the patent which incorporates the cost of examination and development, future innovative work cost, various administrative costs like a patent application cost, indictment expenses to check is inventiveness, and a giving charge. Support expense
• In the wake of getting the cost identified with patent, the following stage is to discover the normal life and date of the utilization of licenses.
• When you will know the normal existence of the licenses, patent amortization sum can discover it out by applying the recipe patent amortization = initial cost of patent/ expected useful life of patent

so by following data bookkeeper can discover the measure of patent amortized. The measure of misfortune on debilitation of generosity can be shown up by applying the accompanying equation:

• Goodwill impaired loss = Carrying value of the company ( Book value of assets + book value of goodwill- book value of liabilities ) – the fair market value of the company
• The fair market value of company = market value of assets - the market value of liabilities

(b). Interpret any information content provided by these disclosures

• Disclosure identified with intangibles assists with discovering the reality of how they were gained and how elusive would be represented after their obtaining. intangibles are significant monetary assets for the association and are an expanding extent of the advantages procured in numerous exchanges
• The revelations in regards to the generosity and impalpable resources ensuing to their procurement will give bookkeeping clients a superior comprehension of the assumptions regarding and changes in those benefits after some time, in this manner improving their capacity to survey future productivity and incomes.