XYZ, Inc. also runs a radio station and has a broadcast license it can renew every 10 years for minimal cost. It paid $3,400,000 for the license 14 years ago. 

• It has received an offer to buy the license for $2,800,000. 

• It believes a 4% discount rate would be best to determine the present value of these cash flows. 

a) Should it impair the asset and why (just provide a yes or no answer and your justification). 

b) Regardless of your answer in a) assume that it did determine that it should impair the asset, what would be the amount of the loss and what would be the journal entry to record the loss? Explain your calculation of the loss amount.
 

Answer rating: 100% (QA)

calculation of the recoverable amount cashflow PVAF for 5 years 4 25000044... View the full answer