Presented below is information related to a copyright owned by Mare Company at December 31, 2020. Cost $8,600,000 Carrying amount 4,300,000 Expected future net cash flows 4,000,000 Fair value 3,200,000 Assume that Mare Company will continue to use this copyright in the future. As of December 31, 2020, the copyright is estimated to have a remaining useful life of 10 years. Instructions a. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. The company does not use accumulated amortization accounts. b. Prepare the journal entry to record amortization expense for 2021 related to the copyright. c. The fair value of the copyright at December 31, 2021, is $3,400,000. Prepare the journal entry (if any) necessary to record the increase in fair value.
Presented below is information related to a copyright owned by Mare Company at December 31, 2020. Cost $8,600,000 Carrying amount 4,300,000 Expected future net cash flows 4,000,000 Fair value 3,200,000 Assume that Mare Company will continue to use this copyright in the future. As of December 31, 2020, the copyright is estimated to have a remaining useful life of 10 years. Instructions a. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2020. The company does not use accumulated amortization accounts. b. Prepare the journal entry to record amortization expense for 2021 related to the copyright. c. The fair value of the copyright at December 31, 2021, is $3,400,000. Prepare the journal entry (if any) necessary to record the increase in fair value.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Presented below is information related to a copyright owned by Mare Company at December 31, 2020.
| Cost |
$8,600,000
|
| Carrying amount |
4,300,000
|
| Expected future net |
4,000,000
|
| Fair value |
3,200,000
|
Assume that Mare Company will continue to use this copyright in the future. As of December 31, 2020, the copyright is estimated to have a remaining useful life of 10 years.
Instructions
a. Prepare the
b. Prepare the journal entry to record amortization expense for 2021 related to the copyright.
c. The fair value of the copyright at December 31, 2021, is $3,400,000. Prepare the journal entry (if any) necessary to record the increase in fair value.
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