Pinkerton Corp. uses the cost model for intangible assets. On April 10, year 3, Pinkerton acquired assets for $100,000. On December 31, year 3, it was determined that the recoverable amount for these intangible assets was $80,000. On December 31, year 4, it was determined that the intangible assets had a recoverable amount of $84,000. What is the impairment gain or loss recognized in year 3 and year 4 on the income statement? O Year 3 Year 4 $20,000 loss $16,000 loss O $20,000 loss $0 O $20,000 $4,000 loss gain O $0 $0

Pinkerton Corp. uses the cost model for intangible assets. On April 10, year 3, Pinkerton acquired assets for $100,000. On December 31, year 3, it was determined that the recoverable amount for these intangible assets was $80,000. On December 31, year 4, it was determined that the intangible assets had a recoverable amount of $84,000. What is the impairment gain or loss recognized in year 3 and year 4 on the income statement? O Year 3 Year 4 $20,000 loss $16,000 loss O $20,000 loss $0 O $20,000 $4,000 loss gain O $0 $0

Name: Pinkerton Corp. uses the cost model for intangible assets. On April 1
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Description: Pinkerton Corp. uses the cost model for intangible assets. On April 10, year 3, Pinkerton acquired assets for $100,000. OnDecember 31, year 3, it was determined that the recoverable amount for these intangible assets was $80,000. On December 31,year

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

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Pinkerton Corp. uses the cost model for intangible assets. On April 10, year 3, Pinkerton acquired assets for $100,000. On
December 31, year 3, it was determined that the recoverable amount for these intangible assets was $80,000. On December 31,
year 4, it was determined that the intangible assets had a recoverable amount of $84,000. What is the impairment gain or loss
recognized in year 3 and year 4 on the income statement?
Year 3
Year 4
$20,000
$16,000
loss
loss
O $20,000
$0
loss
O $20,000
$ 4,000
loss
gain
O $0
$0

IFRS:
permits reversal of impairment losses when there has been a change in economic conditions.
O requires expensing of all R&D costs.
O permits revaluation for goodwill.
O permits capitalization of all internally generated intangible assets.

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