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Blossom Inc. purchased a non-renewable licensing agreement for access to proprietary technology that allows it to produce bio-char from organic waste. When the 10-year licensing agreement was purchased 6 years ago there were no other companies operating in the space. However, numerous competitors have emerged in the industry as direct competitors to Blossom Inc. As a result of recent market entrants, the market demand for its bio-char products has been steadily declining. The company has the following information available related to the licensing agreement: Licensing agreement at Cost Estimated Useful Life Residual Value $124,500 10 years $0 Blossom Inc. is currently testing this asset for impairment. While the licensing agreement could currently be sold for $39,800, Blossom Inc. plans to keep producing the bio-char two more years. It expects net cash flows from production to be $20,900 yearly and hat it can sell the licensing agreement for $7,400 at the end of year two. The current interest rate is 5%.

Blossom Inc. purchased a non-renewable licensing agreement for access to proprietary technology that allows it to produce bio-char from organic waste. When the 10-year licensing agreement was purchased 6 years ago there were no other companies operating in the space. However, numerous competitors have emerged in the industry as direct competitors to Blossom Inc. As a result of recent market entrants, the market demand for its bio-char products has been steadily declining. The company has the following information available related to the licensing agreement: Licensing agreement at Cost Estimated Useful Life Residual Value $124,500 10 years $0 Blossom Inc. is currently testing this asset for impairment. While the licensing agreement could currently be sold for $39,800, Blossom Inc. plans to keep producing the bio-char two more years. It expects net cash flows from production to be $20,900 yearly and hat it can sell the licensing agreement for $7,400 at the end of year two. The current interest rate is 5%.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Blossom Inc. purchased a non-renewable licensing agreement for access to proprietary technology that allows it to produce bio-char from organic waste. When the 10-year licensing agreement was purchased 6 years ago there were no other companies operating in the space. However, numerous competitors have emerged in the industry as direct competitors to Blossom Inc. As a result of recent market entrants, the market demand for its bio-char products has been steadily declining. The company has the following information available related to the licensing agreement: Licensing agreement at Cost Estimated Useful Life Residual Value $124,500 10 years $0 فى Blossom Inc. is currently testing this asset for impairment. While the licensing agreement could currently be sold for $39,800, Blossom Inc. plans to keep producing the bio-char two more years. It expects net cash flows from production to be $20,900 yearly and that it can sell the licensing agreement for $7,400 at the end of year two. The current interest rate is 5%.
Transcribed Image Text:Blossom Inc. purchased a non-renewable licensing agreement for access to proprietary technology that allows it to produce bio-char from organic waste. When the 10-year licensing agreement was purchased 6 years ago there were no other companies operating in the space. However, numerous competitors have emerged in the industry as direct competitors to Blossom Inc. As a result of recent market entrants, the market demand for its bio-char products has been steadily declining. The company has the following information available related to the licensing agreement: Licensing agreement at Cost Estimated Useful Life Residual Value $124,500 10 years $0 فى Blossom Inc. is currently testing this asset for impairment. While the licensing agreement could currently be sold for $39,800, Blossom Inc. plans to keep producing the bio-char two more years. It expects net cash flows from production to be $20,900 yearly and that it can sell the licensing agreement for $7,400 at the end of year two. The current interest rate is 5%.
Assume that Blossom Inc., follows IFRS and uses the rational entity model. Calculate the carrying amount and recoverable amount. (Round answers to 0 decimal places, e.g. 5,275.) Carrying amount of the licensing agreement Recoverable amount $ Yes No GA Is there an impairment loss? If yes, how much is the amount? (Round answer to O decimal places, e.g. 5,275.)
Transcribed Image Text:Assume that Blossom Inc., follows IFRS and uses the rational entity model. Calculate the carrying amount and recoverable amount. (Round answers to 0 decimal places, e.g. 5,275.) Carrying amount of the licensing agreement Recoverable amount $ Yes No GA Is there an impairment loss? If yes, how much is the amount? (Round answer to O decimal places, e.g. 5,275.)
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