Answer:
b. $10,000 loss $4,000 gain
Explanation:
Since the carrying amount of the intangible assets is greater than its recoverable amount in the year 1, therefore the Lawson Corp shall recognised the impairment loss in respect of intangible assets in year 1 as follows:
Impairment loss=Carrying amount of intangible assets-recoverable amount of intangible asset
Impairment loss=$100,000-$90,000=$10,000 loss
Since the recoverable amount of the intangible assets is greater than its carrying amount in the year 2, therefore the Lawson Corp shall reverse the impairment loss recognised in year 1 in the following way:
Gain=recoverable amount of intangible asset-Carrying amount of intangible assets
Gain=$94,000-$90,000=$4,000 Gain
So based on the above calculations,the answer shall be b. $10,000 loss $4,000 gain
