Grafix Image Group owns and markets various brands and trademarks, including Joe

Question

Grafix Image Group owns and markets various brands and trademarks, including Joe Boxer, London Fog, Ocean Pacific, Ecko Unltd., Umbro, Ed Hardy, Lee Cooper, Buffalo, and Peanuts. The company's financial statements for the year ended December 31, 2013, indicate the following totals for these trademarks (in millions): During 2013, Grafix acquired the Buffalo and Lee Cooper trademarks at a cost of $231 million, recorded $6 million of trademark amortization for the year, and disposed of trademarks for proceeds of $27 million cash. None of the trademarks-not even Ed Hardy-were judged to be impaired during the year. Required: Based on the information given, determine the following for trademarks disposed of during 2013: (a) their cost, (b) their accumulated amortization at the time of disposal, and (c) the gain (loss) on disposal of trademarks.

Explanation / Answer

a)Cost disposed during 2013 Opening Balance(Cost) 1950 Acquisition during 2013 @ cost 231 2181 Cost of T/M Disposed(Plugin Fig.) 46 Closing Balance(Cost) 2135 Accumulated Amortisation Account Debit Credit Opening Balance 46 For the year 6 Amortisation on disposed T/M Written back (Plugin) 9 Closing Balance 43 52 52 Proceeds of Disposed T/M 27 Less: Book value of T/M Cost- Acc.Amortisation --- 46-9= 37 Loss on Disposal of trademarks 10 27-37=-10 ANSWERS a)Cost disposed during 2013 46 b)Accumulated Amortisation 9 c)Loss on disposal of trademarks(10) 10

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