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In January, 2005, Targa Corporation Purchased a Patent for a New

question 17

Multiple Choice

In January, 2005, Targa Corporation purchased a patent for a new consumer product for $900,000.At the time of purchase, the patent was valid for fifteen years.Due to the competitive nature of the product, however, the patent was estimated to have a useful life
Of only ten years.During 2010 the product was permanently removed from the market
Under governmental order because of a potential health hazard present in the product.What amount should Targa recognize as an impairment during 2010, assuming amortization is recorded at the end of each year?

Understand how the cash flow statement is affected by changes in inventory, accounts receivable, and accounts payable.

Interpret the cash flow on total assets ratio to evaluate company performance.

Understand the components and format of the Statement of Cash Flows.

Explain the relevance of the Statement of Cash Flows to decision makers.

Definitions:

Securities Litigation Uniform Standards Act of 1998

A federal law that limits the securities class action lawsuits in state courts, aiming to prevent forum shopping and inconsistent rulings.

Class Action Suits

Legal actions in which a group of people collectively bring a claim to court or in which a class action is brought against a defendant.

Sarbanes-Oxley Act of 2002

A U.S. law passed in response to financial scandals to protect investors by improving the accuracy and reliability of corporate disclosures.

Securities and Exchange Commission

A U.S. federal agency responsible for regulating the securities industry, enforcing federal securities laws, and ensuring market integrity.