Question

Larkspur Golf Inc. was formed on July 1, 2016, when Matt Magilke purchased the Old Master Golf Company. Old Master provides video golf instruction at kiosks in shopping malls. Magilke plans to integrate the instructional business into his golf equipment and accessory stores. Magilke paid $770,000 cash for Old Master. At the time, Old Master’s balance sheet reported assets of $670,000 and liabilities of $210,000 (thus owners’ equity was $460,000). The fair value of Old Master’s assets is estimated to be $800,000. Included in the assets is the Old Master trade name with a fair value of $12,000 and a copyright on some instructional books with a fair value of $43,200. The trade name has a remaining life of 5 years and can be renewed at nominal cost indefinitely. The copyright has a remaining life of 40 years. Prepare the intangible assets section of Larkspur Golf Inc. at December 31, 2016. LARKSPUR GOLF INC. Intangibles Section of Balance Sheet Goodwill $ Trade Names 12000 Copyrights $ How much amortization expense is included in Larkspur income for the year ended December 31, 2016? Amortization expense $ SHOW LIST OF ACCOUNTS Prepare the journal entry to record amortization expense for 2017. Prepare the intangible assets section of Larkspur Golf Inc. at December 31, 2017. (No impairments are required to be recorded in 2017.) (Credit account titles are automatically indented when 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 LARKSPUR GOLF INC. Intangibles Section of Balance Sheet $ $ SHOW LIST OF ACCOUNTS At the end of 2018, Magilke is evaluating the results of the instructional business. Due to fierce competition from online and television (e.g., the Golf Channel), the Old Master reporting unit has been losing money. Its book value is now $410,000. The fair value of the Old Master reporting unit is $330,000. The implied value of goodwill is $100,000. Magilke has collected the following information related to the company’s intangible assets. Intangible Asset Expected Cash Flows (undiscounted) Fair Values Trade names $13,800 $4,600 Copyrights 46,000 41,000 Prepare the journal entries required, if any, to record impairments on Larkspur intangible assets. (Assume that any amortization for 2018 has been recorded.) (Credit account titles are automatically indented when 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

Answer 1