Montana matts golf inc was formed on july 1 2009 when matt

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Reference no: EM13599215

Montana Matt's Golf Inc was formed on July 1, 2009, when Matt Magilke purchased the Old Master Golf comany. Old Mast rovides video golf instruction at kiosks in shopping malls. Magilke lans to integrate the instruction 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 $650,000 and liabilities of $200,000(thus owners' equity was $450,000). The fair value of Old Mater's assets is estimated to be $800,000. Included in the asesets is the Old Master trade name with a fair value of $10,000 and a copyright on some instructional books with a fiar value of $24,000. The trade name has a remaining life of 5 years and can be renewed at nomial cost indefinitely. The copyright has a remaining life of 40 years.

(a) Prepare the intangible assets section of Montana Matt's Golf Inc at Dec 31, 2009. How much amortization expense is included in Montana Matt's income for the year ended Dec 31, 2009? Show all supporting computations.

(b) Prepare the journal entry to record amortization expense for 2010. Prepare the intangible assets section of Montan Matt's Golf Inc at Dec 31, 2010.

(c) At the end of 2011, is evaluating the results of the instructional business. Due to fierce competition from online and television, the Old Master reporting unit has been losing money. Its book value is now $500,000. The fair value of the Old Master reporting unit is $420,000. The implied value of goodwill is $90,000. Magilke has collected the following information related to the company's intangible assets.

Intagible Assets Expected Cash Flows(undiscounted) Fair Value
Trade name $9,000 $3,000
Copyright 30,000 25,000

Prepare the journal entries required, if any, to record impairments on Montana Matt's intangible assets. (Assume that any amortization for 2011 has been recorded.) Show supporting computations.

Reference no: EM13599215

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