Question

Exercise 12-07

In early January 2019, Bramble Corporation applied for a trade name, incurring legal costs of $16,200. In January 2020, Bramble incurred $7,200 of legal fees in a successful defense of its trade name.

A.) Compute 2019 amortization, 12/31/19 book value, 2020 amortization, and 12/31/20 book value if the company amortizes the trade name over 10 years.

2019 amortization		$
12/31/19 book value		$
2020 amortization		$
12/31/20 book value		$

B.) Compute the 2020 amortization and the 12/31/20 book value, assuming that at the beginning of 2020, Bramble determines that the trade name will provide no future benefits beyond December 31, 2023.

2020 amortization		$
12/31/20 book value		$

C.) Ignoring the response for part (b), compute the 2021 amortization and the 12/31/21 book value, assuming that at the beginning of 2021, based on new market research, Bramble determines that the fair value of the trade name is $14,560. Estimated total future cash flows from the trade name is $15,760 on January 3, 2021.

2021 amortization		$
12/31/21 book value		$

Answer 1