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PROBLEM N: At the beginning of 2018, Downtown Company acquired an intangible asset for P3,000,000. The intangible asset has an estimated useful life of 10 ears. At the end of 2018, the intangible asset was evaluated to determine whether it was impaired. On same date, the following information are available: Fair value, 12/31/2018 Cost to be incurred if the intangible asset is to be disposed on December 31, 2018 2,100,000 100,000 The asset is expected to generate future cash flows of P300,000 annually for the remaining 9 years. The appropriate discount rate is 5%. The present value of an ordinary annuity of 1 at 5% for nine periods is 7.11. 21. What is the impairment loss to be recognized for 2018? A. 0 B. 567,000 C. 600,000 D. 700,000 22. The carrying amount of an intangible is A. the fair value of the asset at a balance sheet date. B. the asset's acquisition cost less the total related amortization recorded to date. C. equal to the balance of the related accumulated amortization account. D. the assessed value of the asset for intangible tax purposes.

PROBLEM N: At the beginning of 2018, Downtown Company acquired an intangible asset for P3,000,000. The intangible asset has an estimated useful life of 10 ears. At the end of 2018, the intangible asset was evaluated to determine whether it was impaired. On same date, the following information are available: Fair value, 12/31/2018 Cost to be incurred if the intangible asset is to be disposed on December 31, 2018 2,100,000 100,000 The asset is expected to generate future cash flows of P300,000 annually for the remaining 9 years. The appropriate discount rate is 5%. The present value of an ordinary annuity of 1 at 5% for nine periods is 7.11. 21. What is the impairment loss to be recognized for 2018? A. 0 B. 567,000 C. 600,000 D. 700,000 22. The carrying amount of an intangible is A. the fair value of the asset at a balance sheet date. B. the asset's acquisition cost less the total related amortization recorded to date. C. equal to the balance of the related accumulated amortization account. D. the assessed value of the asset for intangible tax purposes.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PROBLEM N: At the beginning of 2018, Downtown Company acquired an intangible asset for P3,000,000. The intangible asset has an estimated useful life of 10 ears. At the end of 2018, the intangible asset was evaluated to determine whether it was impaired. On same date, the following information are available: Fair value, 12131/2018 Cost to be incurred if the intangible asset is to be disposed on December 31, 2018 2,100,000 100,000 The asset is expected to generate future cash flows of P300,000 annually for the remaining 9 years. The appropriate discount rate is 5%. The present value of an ordinary annuity of 1 at 5% for nine periods is 7.11. 21. What is the impairment loss to be recognized for 2018? A. 0 B. 567,000 C. 600,000 D. 700,000 22. The carrying amount of an intangible is A. the fair value of the asset at a balance sheet date. B. the asset's acquisition cost less the total related amortization recorded to date. C. equal to the balance of the related accumulated amortization account. D. the assessed value of the asset for intangible tax purposes.
Transcribed Image Text:PROBLEM N: At the beginning of 2018, Downtown Company acquired an intangible asset for P3,000,000. The intangible asset has an estimated useful life of 10 ears. At the end of 2018, the intangible asset was evaluated to determine whether it was impaired. On same date, the following information are available: Fair value, 12131/2018 Cost to be incurred if the intangible asset is to be disposed on December 31, 2018 2,100,000 100,000 The asset is expected to generate future cash flows of P300,000 annually for the remaining 9 years. The appropriate discount rate is 5%. The present value of an ordinary annuity of 1 at 5% for nine periods is 7.11. 21. What is the impairment loss to be recognized for 2018? A. 0 B. 567,000 C. 600,000 D. 700,000 22. The carrying amount of an intangible is A. the fair value of the asset at a balance sheet date. B. the asset's acquisition cost less the total related amortization recorded to date. C. equal to the balance of the related accumulated amortization account. D. the assessed value of the asset for intangible tax purposes.
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