Answer:
Debit Impairment loss account $50,000
Credit Intangible asset account $50,000
Being entries to recognize impairment loss on patent.
Explanation:
According to IAS 36, an asset is impaired when the carrying amount of the asset is more than the recoverable amount. The recoverable amount is the higher of the fair value and the future net cash flow from the assets.
Given;
Carrying amount = $290,000
Expected future net cash flows from this patent = $240,000
Fair value of the patent = $133,000
The recoverable amount = $240,000 (as this is higher than the fair value)
Impairment is the difference between the carrying amount and the recoverable amount.
Impairment = $290,000 - $240,000
= $50,000
Entries required
Debit Impairment loss account $50,000
Credit Intangible asset account $50,000
Being entries to recognize impairment loss on patent.
