What is the balance in the investment in jack account

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Reference no: EM133654968

Question 1

Jason Inc. purchases a patent with a legal life of 10 years but due to technology, the patent is expected to not have relevance after 5 years. The total capitalized costs for the patent are $10,000. After two years of amortization, there is a change in technology which suggests that the patent costs may not be recoverable. The estimate of the future cash flows from the patent are $2,000. The fair value estimation is $1,000. How much impairment loss should be recorded? (Lesson 2.3)

Question 2

Jill Company owns an equity investment in Jack Company and it is being properly reported using the equity method. Here is the relevant data from the first year of ownership:

% of Jack's stock owned by Jill

30%

Jack's net income

$500,000

Jack's cash dividends paid

$50,000

Amount Jill paid for the stock

$100,000

What is the balance in the Investment in Jack account at year end? (Lesson 3.5)

Question 3

Jessica Inc. purchases debt investments with the intention of trading the investments. Assume the ending value in the investment account (without the FVA) is always $500,000. The following information about the debt investments is known:

Purchase price on Jan 1 of FYE 2025

$500,000

Market price on Dec 31 of FYE 2025

$700,000

Market price on Dec 31 of FYE 2026

$150,000

Market price on Dec 31 of FYE 2027

$550,000

What is the amount of impairment to record on December 31, 2026? (Lesson 3.3)

Reference no: EM133654968

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