Journal entries for impairment of intangible assets
Patagonia Corp., a large, privately held company, is preparing its year-end entries. As senior accountant, you have been asked to prepare the entries related to the company's intangible assets.
Patagonia currently carries the following intangible assets* on its balance sheet:

\begin{array} { l l l } \text { Trade name } & 5125,000 & \text { net of accumulated amortization of } 575,000 \\\text { Patent } & \$ 126,000 & \text { net of accumulated amortization of } \$ 54,000 \\\text { Other intangiblec } & \$ 340,000 & \text { no amortization recorded } \\\text { Tredemark } & \$ 120,000 & \text { net of accumulated amortization of } \$ 30,000 \\& \$ 711,000 &\end{array}

*Current year amortization has already been recorded.
The following additional information is available:
After recent negative press releases relating to the technology that underlies the patent, the company has carried out a recoverability test that indicates that the patent's carrying value is higher than its undiscounted future net cash flows. The patent's fair value has now been estimated at $ 84,000.
The item classified as "Other intangibles" relates to research costs that the company incurred in the current year. According to a statement from the company's President, "The costs were incurred with the intention to gain new knowledge. At the moment we don't know exactly how to use this information, but we are confident that eventually we will be able to use it."
Instructions
Based on the information provided, prepare all journal entries that are required to adjust Patagonia's records as would be required under ASPE.

On May 5, 2020, Samson Corp

Multiple Choice

Correct Answer:VerifiedUnlock this answer nowGet Access to more Verified Answers free of chargeAccess For Free

Correct Answer:
Verified
Unlock this answer now
Get Access to more Verified Answers free of charge