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3 years ago

Presented below is information related to copyrights owned by Ivanhoe Company at December 31, 2020.

Business

1 answer:

Serga [27]3 years ago

8 0

Answer:

Impairment of Intangible Assets

Dr Loss on impairment 860,000

Cr Copyrights 860,000

Dr Amortization expense 344,000

Cr Copyrights 344,000

Explanation:

Ivanhoe Company

Impairment of Intangible Assets

Recoverability test: If the sum of the expected future net cash flows is less or lower than the carrying amount of the asset, then an impairment has occurred.

Asset is Impaired

Expected future cash flow$4,180,000

Carrying value $4,300,000

$(120,000)

Impairment of Intangible Assets

Dr Loss on impairment 860,000

Cr Copyrights 860,000

Fair value test:Carrying amount $ 4,300,000

Fair value 3,440,000

Loss on impairment$ (860,000)

Dr Amortization expense 344,000

Cr Copyrights 344,000

Carrying amount$3,440,000

Useful life ÷10 years

Amortization per year$ 344,000

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