Reference no: EM132685176

As part of the acquisition of Arizona, sanders acquired a patent with a remaining life of 8 years, sanders recorded the patent on March 31, 2018 at a value of $5,000,000. On dec 31,2018 sanders management decided that both the goodwill and the patent for Arizona should be tested for impairment

The following information was available dec 31, 2018 related to the patent

Sum of future cash flows discounted to present value #3,500,000

Sum of future cash flows not discounted to present value (undiscounted) $4,200,000

Fair market value of patent $3,900,000

Problem 1: Show the full impairment test that sanders will perform at dec 31, 2018 to determine the amount of impairment loss to record related to its patent (if any)

Problem 2: at what amount would sanders report the patent on its dec 31st balance sheet after performing the impairment test