Q4. Firoz Corp. obtained a trade name in January 2010, incurring legal costs of SAR15,000. The company amortizes the trade name over 8 years. Firoz, successfully defended its trade name in January 2011, incurring SAR 4,900 in legal fees. At the beginning of 2012, based on new marketing research, Firoz determines that the recoverable amount of the trade name is SAR 12,000. Required: a. Prepare the necessary journal entries on amortization for the years ending December 31, 2010 & 2011. b. In 2012, will Firoz meet any impairment loss? If yes, prepare journal entry to record the impairment loss and amortization entry on 31st Dec 2012

Q4. Firoz Corp. obtained a trade name in January 2010, incurring legal costs of SAR15,000. The company amortizes the trade name over 8 years. Firoz, successfully defended its trade name in January 2011, incurring SAR 4,900 in legal fees. At the beginning of 2012, based on new marketing research, Firoz determines that the recoverable amount of the trade name is SAR 12,000. Required: a. Prepare the necessary journal entries on amortization for the years ending December 31, 2010 & 2011. b. In 2012, will Firoz meet any impairment loss? If yes, prepare journal entry to record the impairment loss and amortization entry on 31st Dec 2012

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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Q4. Firoz Corp. obtained a trade name in January 2010,
incurring legal costs of SAR15,000. The company amortizes the
trade name over 8 years. Firoz, successfully defended its trade
name in January 2011, incurring SAR 4,900 in legal fees. At the
beginning of 2012, based on new marketing research, Firoz
determines that the recoverable amount of the trade name is
SAR 12,000.
Required:
a. Prepare the necessary journal entries on amortization for
the years ending December 31, 2010 & 2011.
b. In 2012, will Firoz meet any impairment loss? If yes,
prepare journal entry to record the impairment loss and
amortization entry on 31st Dec 2012

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