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Tamarisk Industries has the following patents on its December 31, 2019, balance sheet. Patent Item Initial...

Tamarisk Industries has the following patents on its December 31, 2019, balance sheet.

Patent Item

Initial Cost

Date Acquired

Useful Life at Date Acquired

Patent A

 $44,676 3/1/16 17 years

Patent B

 $17,280 7/1/17 10 years

Patent C

 $23,520 9/1/18 4 years


The following events occurred during the year ended December 31, 2020.

1. Research and development costs of $249,000 were incurred during the year.
2. Patent D was purchased on July 1 for $46,512. This patent has a useful life of 91/2 years.
3. As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent B’s value may have occurred at December 31, 2020. The controller for Tamarisk estimates the expected future cash flows from Patent B will be as follows.

Year

Expected Future Cash Flows

2021

 $1,850

2022

 1,850

2023

 1,850


The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year.)

Compute the total carrying amount of Tamarisk’ patents on its December 31, 2019, balance sheet.

Compute the total carrying amount of Tamarisk' patents on its December 31, 2020, balance sheet.

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Expert Solution

ekkarill92 answered 1 year ago
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