Annual report pursuant to section 13 and 15(d)

2. Plant, Property, and Equipment and Intangible Assets

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2. Plant, Property, and Equipment and Intangible Assets
12 Months Ended
Dec. 31, 2012
Property, Plant and Equipment [Abstract]  
Plant, Property, and Equipment and Intangible Assets

The Company has plant, property and equipment and other intangible assets used in the creation of revenue as follows as of December 31, 2012 and December 31, 2011:

 

    2012     2011  
Furniture and Equipment   $ 89,159     $ 87,261  
Less Accumulated Depreciation     (65,423 )     (54,367 )
Net Fixed Assets   $ 23,736     $ 32,894  
                 
Trademarks   $ 129,831     $ 129,831  
Product Masters     3,279,369       3,255,107  
Other Intangible Assets     290,161       224,605  
Less Accumulated Amortization     (3,343,291 )     (3,204,524 )
Net Intangible Assets   $ 356,070     $ 405,019  

 

Pursuant to FASB Accounting Standards Codification regarding Topic 350, Intangible Assets, intangible asset(s) acquired, either individually or with a group of other assets shall be initially recognized and measured based on fair value.  In the acquisition of the assets from Genius Products, fair value was calculated using a discounted cash flow analysis of the revenue streams for the estimated life of the assets.  As this resulted in a fair market value in excess of the purchase price, the assets were recorded at $2,489,082, the total purchase price discounted with the imputed interest rate of 10%.

   

The Company reviews all intangible assets periodically to determine if the value has been impaired by recent financial transactions using the discounted cash flow analysis of revenue stream for the estimated life of the assets.  At year end December 31, 2012 and 2011, it was determined that no impairment existed.

 

The Company continues to develop new videos, music, books and digital applications in addition to adding content, improved animation and bonus songs/features to its existing product catalog.  In accordance with FASB Accounting Standards Codification regarding ASC 350 - Intangible Assets and ASC 730 - Research and Development, the costs of new product development and significant improvement to existing products are capitalized while routine and periodic alterations to existing products are expensed as incurred. As of December 31, 2012, the Company has $246,617 in Capitalized Product Development in Process representing video, music, website, digital application and preschool preparation program development projects not yet completed.