Question

The following information is available for Ivanhoe Company. 1. Purchased a copyright on January 1, 2020 for $62,400. 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 $17,784.

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.)
Jan 1st 2020, July 1st, 2020, Dec 31st, 2020

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 $62,400, and its fair value is $59,280. The accumulated amortization at the end of 2021 was $15,288. 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

JOURNAL ENTRY
Date	Accounts titles and Explanation	Debit ($)	Credit ($)
01-Jan-20	Copyright	62,400
	Cash		62,400
01-Jul-20	Copyright	17,784
	Cash		17,784
31-Dec-20	Amortization Expense((62,400/10) + {(17,784/9.5)*6/12}	7,176
	Copyright		7,176
Amortization in year 2021 = 62,400/10 + 17,784/9.5 = 8,112
carrying Amount = 62,400 +17784-15,288 = $64,896
Recoverable amount = $62,400
fair value=59,280
Since,the carrying Amount is greater than Expected net cash flows,
Amount of Impairment = $64,896 - $59,280 = ($5,616)