Explore BrainMass

Explore BrainMass

    Impairment of asset

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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.

    © BrainMass Inc. brainmass.com June 3, 2020, 11:06 pm ad1c9bdddf
    https://brainmass.com/business/capital-asset-pricing-model/263220

    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 ...

    Solution Summary

    The solution explains how to record the impairment of an asset

    $2.19

    ADVERTISEMENT