Annual report pursuant to section 13 and 15(d)

Note 2: Plant, Property, and Equipment and Intangible Assets

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Note 2: Plant, Property, and Equipment and Intangible Assets
 12 Months Ended
Dec. 31, 2011
Property, Plant and Equipment Disclosure [Text Block]
Note 2:  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:

   
2011
   
2010
 
                 
Furniture and Equipment
 
$
87,261
   
$
76,986
 
Less Accumulated Depreciation
   
(54,367
)
   
(41,818
)
Net Fixed Assets
 
$
32,894
   
$
35,168
 

     
2011
     
2010
 
                 
Trademarks
 
$
129,831
   
$
129,831
 
Product Masters
   
3,255,107
     
3,202,712
 
Other Intangible Assets
   
224,605
     
223,282
 
Less Accumulated Amortization
   
(3,204,524
)
   
(3,008,214
)
Net Intangible Assets
 
$
405,019
   
$
547,611
 

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, 2011 and 2010, it was determined that no impairment existed.

The Company continues to develop new CDs and DVDs, in addition to adding content, improved animation and bonus songs/features to their existing CD and DVD collection.  In accordance with FASB Accounting Standards Codification regarding the topics of Intangible Assets (350) and Research and Development (730), 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, 2011, the Company has $278,696 in Capitalized Product Development in Process representing DVD, CD, and toy development projects not yet completed.