Jethro Inc. is reviewing its intangible assets for impairment. The accounting team has received the following information on the assets' book value, annual cash flows and fair values: Asset Carrying value Remaining Annual expected Estimated selling useful life cash flows price Patent #1 $80,000 $8,000 $70,000 Patent #2 $180,000 8 years 15 years Indefinite $15,000 $175,000 License $50,000 $ 2,000 $35,000 Selling costs of any intangible asset is expected to be negligible. The company's internal rate of return (IRR) is 5% Required: Test each of the intangible assets for impairment. If the asset is impaired, record impairment. (a) Assuming the company uses ASPE's cost recovery impairment model; and (b) Assuming the company uses IFRS's rational entity impairment model (for the PV of an asset with unlimited life, set n to a very large value like 1000 or the highest value on the annuity table)
Jethro Inc. is reviewing its intangible assets for impairment. The accounting team has received the following information on the assets' book value, annual cash flows and fair values: Asset Carrying value Remaining Annual expected Estimated selling useful life cash flows price Patent #1 $80,000 $8,000 $70,000 Patent #2 $180,000 8 years 15 years Indefinite $15,000 $175,000 License $50,000 $ 2,000 $35,000 Selling costs of any intangible asset is expected to be negligible. The company's internal rate of return (IRR) is 5% Required: Test each of the intangible assets for impairment. If the asset is impaired, record impairment. (a) Assuming the company uses ASPE's cost recovery impairment model; and (b) Assuming the company uses IFRS's rational entity impairment model (for the PV of an asset with unlimited life, set n to a very large value like 1000 or the highest value on the annuity table)
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter10: Long-lived Tangible And Intangible Assets
Section: Chapter Questions
Problem 29P
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