ny owns a patent for which it paid $75 million. At the end of 2024, it had accumulated amortization on the patent of $15 million. Due to adverse economic conditions, the company's management determined that it should assess whet
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A company owns a patent for which it paid $75 million. At the end of 2024, it had accumulated amortization on the patent of $15 million. Due to adverse economic conditions, the company's management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future
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- Corning Industries owns a patent for which it paid $77,000. At the end of the current year, accumulated amortization on the patent totaled $14,000. Due to adverse economic conditions, Corning’s management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future cash flows to be provided by the patent total $45,000, and the patent's fair value is $30,000. (a) What is the amount of the impairment loss, if any, on the patent at the end of the current year? (b) What is the book value of the patent after any impairment loss is recorded?Jung Inc. owns a patent for which it paid $85 million. At the end of 2021, it had accumulated amortization on the patent of $13 million. Due to adverse economic conditions, Jung's management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future cash flows to be provided by the patent total $42 million, and the patent's fair value at that point is $33 million. Under these circumstances, Jung:On January 1, 2021, Larry Company purchased a patent for an immune system boosting drink called Infra for P800,000. The patent is determined to have an indefinite life. During 2022, a competitor introduced a new product that is in direct competition with Infra; hence, the patent was tested for possible impairment. Data gathered suggests that the patent still has an indefinite life, but the cash flows to be generated from the asset have been reduced to either P40,000 per year (with 50% probability) or to P80,000 per year (with 50% probability). The appropriate risk-free interest rate is 8% and the risk-adjusted interest rate is 10%. What is the impairment loss recognized in the accounts for the year ended December 31, 2022? P200,000 P400,000 P800,000 P0
- 1. MadDog Inc. owns equipment for which it paid $85 million. At the end of 2020, it had accumulated depreciation on the equipment of $15 million. Due to adverse economic conditions, MadDog's management determined that it should assess whether an impairment loss should be recognized for the equipment. The estimated undiscounted future cash flows to be provided by the equipment total $55 million, and the equipment's fair value at that point is $40 million. a. Under these circumstances, determine if MadDog should record an impairment loss and if yes, in what amount. Clearly indicate the steps that led to your conclusion. b. Make the necessary journal entry to record the impairment loss. If you determined that no entry is necessary, write "No entry". c. How would your answer change if the estimated undiscounted future cash flows to be provided by the equipment total $85 million instead of $55 million?On January 1, 2008, Ryan Company purchased a patent for P7,140,000. The patent is being amortized over its remaining legal life of 15 years expiring on January 1, 2023. During 2011, Ryan determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. Question: What amount should be reported in the statement of financial position for the patent, net of accumulated amortization, on December 31, 2011?On January 1, 2020, VKS Corporation sold a piece of equipment that was acquired ten years ago for P350,000. At the time of sale, the equipment had an accumulated depreciation of P240,000. CPA received a non-interest-bearing note for P300,000 in exchange for the equipment. The note is due on January 1, 2022. There is no readily available market value for the equipment, but the current market rate of interest for comparable notes is 12%. How much is the gain on sale of equipment in 2020 and the interest revenue in 2021, respectively? (PV of 1 at 12% for 2 periods is 0.7972; PV of ordinary annuity at 12% for 2 periods is 1.6901) A. P129,160 and P28,699 B. P129,160 and P32,141 C.P143,515 and P30,422 D. P143,515 and P16,063
- On January 1, 2020, CPA Corporation sold a piece of equipment that was acquired ten years ago for P350,000. At the time of sale, the equipment had an accumulated depreciation of P240,000. CPA received a non-interest-bearing note for P300,000 in exchange for the equipment. The note is due on January 1, 2022. There is no readily available market value for the equipment, but the current market rate of interest for comparable notes is 12%. How much is the gain on sale of equipment in 2020 and the interest revenue in 2021, respectively? (PV of 1 at 12% for 2 periods is 0.7972; PV of ordinary annuity at 12% for 2 periods is 1.6901) *The management of Bonita Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $981,000 with depreciation to date of $436,000 as of December 31, 2025. On December 31, 2025, management projected its future net cash flows from this equipment to be $327,000 and its fair value to be $250,700. The company intends to use this equipment in the future. (a) Prepare the journal entry (if any) to record the impairment at December 31, 2025. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List debit entry before credit entry.) Date Dec. 31 Account Titles and Explanation eTextbook and Media List of Accounts Debit CreditOn January 1, 2020, due to the unexpected advances in technology, Bubio Co. realized that its machinery has been impaired. The unit was purchased on January 1, 2016 for P20,000,000. The entity initially estimated that the asset has a useful life of 20 years with no residual value. On that date, the fair value of the asset was P10,000,000. The cash inflows and outflows to be derived from the asset from its continuing use are as follows: End of year Cash inflow Cash outflow 2020 7,500,000 3,500,000 2021 6,000,000 3,000,000 2022 4,000,000 2,000,000 2023 3,000,000 1,500,000 2024 2,500,000 1,000,000 Should the entity decide to continue to use the asset, remaining life will be 5 years. The discount rate used by the entity is 10%. How much is the impairment loss to be recognized on January 1, 2020?
- In 2015, Mennorah Corporation acquired production machinery at a cost of $490,000, which now has a book value of $190,000. The sum of undiscounted future cash flows from use of the machinery is $180,000. and it's fair value is $120,000. What amount should Mennorah recognize as a loss on impairment?Dazzle Corporation purchased a patent for P7,140,000 on January 2014. The patent is being amortized over the remaining legal life of 15 years expiring on January 2029. During 2017, Dazzle Corporation determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. Using the same information on number (33), what amount should be charged to patent amortization expenses for the year ended December 31, 2017, assuming there is no change in the patent's useful life? OP816,000 O P476,000 O None of the above OP571.200 OP4,896,000On January 1, 2020, The Corporation sold a piece of equipment that was acquired ten years ago for P350,000. At the time of sale, the equipment had an accumulated depreciation of P240,000. Corporation received a non-interest-bearing note for P300,000 in exchange for the equipment. The note is due on January 1, 2022. There is no readily available market value for the equipment, but the current market rate of interest for comparable notes is 12%. How much is the gain on sale of equipment in 2020 and the interest revenue in 2021, respectively? (PV of 1 at 12% for 2 periods is 0.7972; PV of ordinary annuity at 12% for 2 periods is 1.6901)