At the end of 2023, Culver Corporation owns a licence with a remaining life of 10 years and a carrying amount of $544,000. Culver expects undiscounted future cash flows from this licence to total $548,500. The licence's fair value is $439,100 and disposal costs are estimated to be nil. The licence's discounted cash flows (that is, value in use) are estimated to be $489,700. Culver prepares financial statements in accordance with ASPE. (a) Your answer is partially correct. Determine if the licence is impaired at the end of 2023. The licence is not impaired at the end of 2023. Prepare any related entry that is necessary. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit Credit

At the end of 2023, Culver Corporation owns a licence with a remaining life of 10 years and a carrying amount of $544,000. Culver expects undiscounted future cash flows from this licence to total $548,500. The licence's fair value is $439,100 and disposal costs are estimated to be nil. The licence's discounted cash flows (that is, value in use) are estimated to be $489,700. Culver prepares financial statements in accordance with ASPE. (a) Your answer is partially correct. Determine if the licence is impaired at the end of 2023. The licence is not impaired at the end of 2023. Prepare any related entry that is necessary. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Don't give answer in image format
Truffle Inc. acquired a patent on January 1, 2015 for $7,800,000. It was expected to have a 10 year life and no residual value. Truffle uses straight-line amortization for its patents. On December 31, 2018, the expected future cash flows from the patent are $518,000 per year for the next six years. The present value of these cash flows, discounted at Truffle’s market interest rate, is $2,120,000. What amount, if any, of impairment loss will be reported on Truffle’s 2018 income statement?
Ac.
Please do not give solution in image format ?
Protection Company develops a patent on a new fingerprint security technology. On January 1, 2018, this patent is registered for a cost of $30,000,000 for a period of 10 years. The company does not expect this technology to be obsolete over at least the next 15 years and intends to use it over this period. At the end of 2020, the fair value of the patent is $15,000,000. The discounted value of future cash flows (value-in-use) is $16,000,000. The Company adopts the cost model. 1. What will the cost of patent be? 2. What will the useful life be? Justify your answer. 3. Prepare the entries for 2018, 2019 and 2020. Please show the workings. Dont provide handwritten or image based answers thank you
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 Credit
At the end of 2020, Bonita Company is conducting an impairment test and needs to develop a fair value estimate for machinery used in its manufacturing operations. Given the nature of Bonita's production process, the equipment is for special use. (No secondhand market values are available.) The equipment will be obsolete in 2 years, and Bonita's accountants have developed the following cash flow information for the equipment. Year 2021 2022 2022 Net Cash Flow Estimate $5,440 9,500 $(460) 2,180 3,800 Scrap value $530 970 Probability Assessment 40% Click here to view factor tables 60% 20% 60% 20% 50% 50% Using expected cash flow and present value techniques, determine the fair value of the machinery at the end of 2020. Use a 6% discount rate. Assume all cash flows occur at the end of the year. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Sair Fair value of the machinery at the end of 2020 $
At the end of 2023, Blue Spruce Corporation owns a licence with a carrying amount of $505,000. Blue Spruce expects undiscounted future cash flows from this licence to total $509,100. The licence's fair value is $400,100 and disposal costs are estimated to be nil. The licence's discounted cash flows (that is, value in use) are estimated to be $447,400. Assume that the licence was granted in perpetuity and has an indefinite life, and that Blue Spruce prepares financial statements in accordance with ASPE. Assume that the licence was granted in perpetuity and has an indefinite life. Your answer is partially correct. Determine if the licence is impaired at the end of 2023. The licence is impaired at the end of 2023. Prepare any related entry that is necessary. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit…
On January 1, 2021, Bambi Ltd. purchased equipment for $728,000. The equipment was assumed to have an 8-year useful life and no residual value and was to be depreciated using the straight-line method. On January 1, 2023, Bambi's management became concernedthat the equipment may have become obsolete. Management calculated that the undiscounted future net cash flows from the equipment was $523,250, the discounted future net cash flows was $464,100, and the current fair value of the equipment less cost ofdisposal (of $1,800 ) was $455,000. c) Assuming that Bambi is a public Canadian company, identify which model should be used to test for impairment. d) Record the journal entry to record the impairment loss, if any. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit…
At the end of 2023, Swifty Corporation owns a licence with a carrying amount of $510,000. Swifty expects undiscounted future cash flows from this licence to total $515,600. The licence's fair value is $405,700 and disposal costs are estimated to be nil. The licence's discounted cash flows (that is, value in use) are estimated to be $455,000. Assume that the licence was granted in perpetuity and has an indefinite life, and that Swifty prepares financial statements in accordance with ASPE. Assume that the licence was granted in perpetuity and has an indefinite life. Determine if the licence is impaired at the end of 2023. The licence is impaired at the end of 2023. Prepare any related entry that is necessary. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Loss on…