Question

Exercise 12-07 (Part Level Submission) In early January 2019, Swifty Corporation applied for a trade name, incurring legal costs of $17,400. In January 2020, Swifty incurred $7,200 of legal fees in a successful defense of its trade name. (a) Your answer is correct 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 1740 12/31/19 book value 15660 2020 amortization 2540 12/31/20 book value 20320 Click if you would like to Show Work for this question: Open Show Work

Answer 1

Relevant Para from IAS 38 Intangible assets may be carried at a revalued amount (based on fair value) less any subsequent amortisation and impairment losses only if fair value can be determined by reference to an active market. Under the revaluation model, revaluation increases are recognised in other comprehensive income and accumulated in the "revaluation surplus" within equity except to the extent that they reverse a revaluation decrease previously recognised in profit and loss. If the revalued intangible has a finite life and is, therefore, being amortised the revalued amount is amortised. 12/31/2020 Book Value $20320 $16080 Begg of 2021 Fair Value of Trade Name Estimated Total Future CF's from Trade Name S17180 Part C 2021 Amortisation 12/31/2021 Book Value =Fair Value/Remaining Period =16080/8 =Fair Value-Amortisation 2021 =16080-2010 $ 2010 $ 14070