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zhannawk [14.2K]
3 years ago
5

Martinez Corporation owns a patent that has a carrying amount of $310,000. Martinez expects future net cash flows from this pate

nt to total $250,000. The fair value of the patent is $160,000. Prepare Martinez’s journal entry to record the loss on impairment.
Business
1 answer:
meriva3 years ago
6 0

Answer:

Please find the detailed answer as follows:

Explanation:

Step 1. Given information.

Carrying amount 310.000

Fair Value 160.000

Step 2. Formulas needed to solve the exercise.

Impairment loss = Carrying value - Fair Value

Step 3. Calculation.

Impairment loss = $310.000 - $116.000 = $194.000.

Step 4. Solution.

The carrying amount of $310.000 > fair value of $160.000. To measure the impairment loss, just do CV-FV. hence $310.000 - $116.000 = $194.000.

Loss on impairment $194.000

Patent $194.000

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