Question

The following information is available for Blossom Company. 1. Purchased a copyright on January 1, 2020 for $54,000. It is estimated to have a 10-year life. 2. On July 1, 2020, legal fees for successful defense of the copyright purchased on January 1, 2020, were $15,390.

Prepare the journal entries to record all the events related to the copyright during 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit January 1, 2020July 1, 2020December 31, 2020 January 1, 2020July 1, 2020December 31, 2020 January 1, 2020July 1, 2020December 31, 2020 SHOW LIST OF ACCOUNTS

At December 31, 2021, an impairment test is performed on the copyright purchased in 2020. It is estimated that the net cash flows to be received from the copyright will be $54,000, and its fair value is $51,300. The accumulated amortization at the end of 2021 was $13,230. Compute the amount of impairment, if any, to be recorded on December 31, 2021. (If there is a loss on impairment, then enter amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Amount of impairment $

Answer 1

Date	Accounts titles and Explanation	Debit ($)	Credit ($)
January 1 ,2020	Copyright	$ 54,000
	Cash		$ 54,000
July 1, 2020	Copyright	$ 15,390
	Cash		$ 15,390
December 31,2020	Amortization Expense ( $ 54,000 / 10 Years ) + ($ 15,390 / 9.5) x 6 /12)	$ 6,210
	Copyright		$ 6,210
	Carrying Amount     = Cost (-) Accumulated Depreciation     = $ 54,000 + $ 15,390 (-) $ 13,230    = $ 56,160
	Amount of Impairment (Loss)     = Fair Value (-) Carrying Amount    =    $ 51,300 (-) $ 56,160    =    ($ 4,860 )
	Amount of Impairment (Loss)   =    ($ 4,860 )