Purchase Solution

Impairment of asset

Not what you're looking for?

Ask Custom Question

Presented below is information related to copyrights owned by SunCo Corporation at December 31, 2006.

Cost $2,700,000
Carrying amount 2,400,000
Expected future net cash flows 2,100,000
Fair value 1,200,000

Assume SunCo will continue to use this asset in the future. As of December 31, 2006, the copyrights have a remaining useful life of 4 years.

Instructions

(a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2006.

(b) Prepare the journal entry to record amortization expense for 2007.

(c) The fair value of the copyright at December 31, 2007 is $1,400,000. Prepare the journal entry (if any) necessary to record this increase in fair value.

Purchase this Solution

Solution Summary

The solution explains how to record the impairment of an asset

Solution Preview

(a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2006.

Impairment is there if the expected future cash flows are less than the carrying amount. In this case the future cash flows are less than the carrying value and so there is an ...

Purchase this Solution


Free BrainMass Quizzes
MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Motivation

This tests some key elements of major motivation theories.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.