P11-12 Depreciation and amortization; impairment
At the beginning of 2009, Metatec Inc. acquired Ellison Technology Corporation for $600 million. In addition to cash, receivables, and inventory, the following assets and their fair values were also acquired:
AND SO ON
The plant and equipment are depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The patent is estimated to have a 5-year useful life, no residual value, and is amortized using the straight-line method.
At the end of 2011, a change in business climate indicated to management that the assets of Ellison might be impaired. The following amounts have been determined:
*After first recording any impairment losses on plant and equipment and the patent.
Click here for the solution: At the beginning of 2009, Metatec Inc. acquired Ellison Technology Corporation for $600 million
