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Worked-example setupScope and assumptions
- Linden Peak Instruments and Sensor Systems are fictional; transaction scope, acquisition date, asset identities, reporting unit, amounts, useful lives, fair values, and impairment path are supplied.
- The combination uses the core public-company model; no private-company or not-for-profit alternative is elected.
- The license and customer relationship use stipulated straight-line consumption, zero residual value, and the supplied elapsed months.
- The trade-name and reporting-unit fair values are supplied valuation outputs; the exercise does not perform or validate valuation.
- Period
- Acquisition date and annual reporting period ending December 31
- Units
- US dollars and months
- Rounding
- Full precision internally; learner-facing dollars display to cents
Life cards before schedules
The purchased license has a fifteen-year legal term but a supported six-year expected-use period because the related platform will be replaced. It is ready April 1. The acquired customer relationship has a supported ten-year life and is available for use throughout the year. Both use stipulated straight-line consumption and zero residual value.
The acquired trade name has renewable protection, low supported renewal cost, continued expected use, and no current limiting factor. It is classified as indefinite-lived, with a separate reassessment and impairment workpaper.
Finite-life schedule
| Asset | Cost | Life | Elapsed | Amortization | Ending carrying amount |
|---|---|---|---|---|---|
| License | $240,000 | 72 months | 9 months | $30,000 | $210,000 |
| Customer relationship | 600,000 | 120 months | 12 months | 60,000 | 540,000 |
| Total | $90,000 | $750,000 |
The fifteen-year legal license term does not override the supported six-year economic use. The schedule begins at readiness, not payment.
Acquisition allocation before goodwill
Supplied identifiable assets total $5,650,000: $250,000 cash, $750,000 receivables, $1,800,000 PP&E, $600,000 customer relationship, $1,000,000 patented technology, $950,000 trade name, and $300,000 IPR&D. After $1,550,000 liabilities, identifiable net assets are $4,100,000.
$4,800,000 consideration − $4,100,000 identifiable net assets
= $700,000 goodwill
The packet stipulates the core model. A private-company alternative would need eligibility and election evidence before changing identifiable rows or later goodwill accounting.
Separate impairment lanes
The indefinite-lived trade name has a supplied $900,000 carrying amount and $760,000 fair value, producing a $140,000 loss. Sensor Systems is the supplied goodwill reporting unit; its $5,400,000 carrying amount exceeds $5,050,000 fair value by $350,000. Because goodwill is $700,000, the bounded goodwill loss is $350,000 and ending goodwill is $350,000.
No undiscounted-cash-flow screen is inserted into either calculation. The provided values are inputs, not outputs of the workbook.
Release boundary
The calculation verifies amortization, identifiable-net-asset addition, residual goodwill, and loss limits. The close still needs approved life and unit memos, valuation support, class rollforwards, cash/noncash additions, entries, disclosure, and review sign-off. A tied workbook cannot supply those judgments.
Quantitative companions
Choose from 2 ways to work with this calculation.
Verified calculation · intangible asset analysis
The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.
- business combination consideration
- 4,800,000
- business combination identifiable assets
- 7 fields
Inspect data
{
"acquired_iprd": 300000,
"cash": 250000,
"customer_relationship": 600000,
"patented_technology": 1000000,
"property_plant_and_equipment": 1800000,
"receivables": 750000,
"trade_name": 950000
}- business combination liabilities
- 1 field
Inspect data
{
"assumed_liabilities": 1550000
}- finite life assets
- 2 fields
Inspect data
{
"customer_relationship": {
"cost": 600000,
"months_elapsed": 12,
"residual_value": 0,
"useful_life_months": 120
},
"license": {
"cost": 240000,
"months_elapsed": 9,
"residual_value": 0,
"useful_life_months": 72
}
}- goodwill impairments
- 1 field
Inspect data
{
"sensor_reporting_unit": {
"goodwill_carrying_amount": 700000,
"reporting_unit_carrying_amount": 5400000,
"reporting_unit_fair_value": 5050000
}
}- indefinite life impairments
- 1 field
Inspect data
{
"trade_name": {
"carrying_amount": 900000,
"fair_value": 760000
}
}Recomputed result
| Measure | Value |
|---|---|
| business combination acquired iprd asset | 300,000 |
| business combination assumed liabilities liability | 1,550,000 |
| business combination cash asset | 250,000 |
| business combination customer relationship asset | 600,000 |
| business combination goodwill | 700,000 |
| business combination identifiable assets | 5,650,000 |
| business combination identifiable net assets | 4,100,000 |
| business combination liabilities | 1,550,000 |
| business combination patented technology asset | 1,000,000 |
| business combination property plant and equipment asset | 1,800,000 |
| business combination receivables asset | 750,000 |
| business combination trade name asset | 950,000 |
| customer relationship depreciable amount | 600,000 |
| customer relationship ending carrying amount | 540,000 |
| customer relationship monthly amortization | 5,000 |
| customer relationship period amortization | 60,000 |
| license depreciable amount | 240,000 |
| license ending carrying amount | 210,000 |
| license monthly amortization | 3,333.3333 |
| license period amortization | 30,000 |
| sensor reporting unit ending goodwill | 350,000 |
| sensor reporting unit goodwill impairment loss | 350,000 |
| sensor reporting unit reporting unit excess | 350,000 |
| total capitalized | 0 |
| total cost events | 0 |
| total expense | 0 |
| total finite life ending carrying amount | 750,000 |
| total goodwill impairment | 350,000 |
| total indefinite life impairment | 140,000 |
| total period amortization | 90,000 |
| trade name ending carrying amount | 760,000 |
| trade name impairment loss | 140,000 |