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Accounting, Analysis, and Principles On January 2, 2017, Culver Corp. reported the following intangible assets: (1)...

Accounting, Analysis, and Principles

On January 2, 2017, Culver Corp. reported the following intangible assets: (1) copyright with a carrying value of $13,000, and (2) a trade name with a carrying value of $8,800. The trade name has a remaining life of 5 years and can be renewed at nominal cost indefinitely. The copyright has a remaining life of 10 years.

At December 31, 2017, Culver assessed the intangible assets for possible impairment and developed the following information.

Estimated Undiscounted Expected Future Cash Flows

Estimated Fair Value
Copyright               $18,000      $14,400
Trade Name      10,300

     5,400

Prepare any journal entries required for Culver's intangible asses at December 31, 2017.

Answer Set up:

Date Account Titles and Explanation Debit

Credit

Dec. 31

(To record amortization expense)

Dec. 31

(To record loss on impairment)

Solutions

Expert Solution

Carrying value Life
Copyright $13,000 10 years
Trade name $8,800 5 years
Amortization expense = Carrying value / remainng useful life
Copyright = $ 13000 / 10
= $ 1300
Trademark = $ 8800 / 5
= $ 1760
1 Amortization expense Dr 3060
To Copyright A/c 1300
To Tradename A/c 1760
Income Statement Dr 3060
To amortization expense 3060
There will be no impairment in case of Copyright as estimated fair value is more than carrying value.
Impairment in case of tradename = (Carrying value - amortization) - Estimated fair value
= (8800 - 1760) - 5400
1640
2 Impairment loss Dr 1640
To Tradename A/c 1640
Income Statement Dr 1640
To impairment loss 1640

ekkarill92 answered 2 years ago
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