WileyPLUS: MyWileyPLUS I HelpI Contact Us 1 Log.C Kieso, Intermediate Accounting

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WileyPLUS: MyWileyPLUS I HelpI Contact Us 1 Log.C Kieso, Intermediate Accounting, 16e Intermediate Accounting (ACCT 3103 and 311 CALCULATOR STANDARD VIEN PRINTER VERSION BACK NEXT Exercise 12-13 Presented below is information related to copyrights owned by Mare Company at December 31, 2017. $8,600,000 4,300,000 4,000,000 3,200,000 Cost Carrying amount Expected future net cash flows Fair value Assume that Mare Company will continue to use this copyright in the future. As of December 31, 2017, the copyright is estimated to have a remaining useful life of 10 years. Prepare the journal entry to record the impairment of the asset at December 31, 2017. The company does not use accumulated amortization accounts. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Account Titles and Explanation 29 AM 11/16/201

Explanation / Answer

Answer :- Journal entries

Impairment Loss A/c Dr.

To Copyright A/c

1100000

1100000

Amortization expense A/c Dr.

To Copyright A/c

  320000

  320000

Notes : 1). The first journal entry is for recording the impairment of asset (coyright) at Dec. 31, 2017.

Impairment loss = Carrying amount - Fair value.

= 4300000 - 3200000

= $ 1100000.

2). The second journal entry is for recording the amortization expense on copyright in the year 2018.

Amortization expense = (Carrying amount - Impairment loss) / Useful life of copyright.

= (4300000 - 1100000) / 10

= 3200000 / 10

= $ 320000.

3). No entry will be passed to record the increase in fair value of copyright. (Impairment loss will not be restored).

Serial number Account Titles and Explanation Debit ($) Credit ($) 1).

Impairment Loss A/c Dr.

To Copyright A/c

1100000

1100000

2).

Amortization expense A/c Dr.

To Copyright A/c

  320000

  320000

3). No entry.   - -

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