Question

The following information is for a copyright owned by Venetian Corp., a private entity, at December 31, 2014. Venetian Corp. applies ASPE.
Cost ....................... $4,300,000
Carrying amount .................. 2,150,000
Expected future net cash flows (undiscounted) ....... 2,000,000
Fair value .................... 1,600,000
Assume that Venetian Corp. will continue to use this copyright in the future. As at December 31, 2014, the copyright is estimated to have a remaining useful life of 10 years.
Instructions
(a) Prepare the journal entry, if any, to record the asset's impairment at December 31, 2014.
(b) Prepare the journal entry to record amortization expense for 2015 related to the copyright.
(c) The copyright's fair value at December 31, 2015, is $2.2 million. Prepare the journal entry, if any, to record the increase in fair value.
(d) Using the information from part (a), discuss whether the copyright would be amortized in 2014 before the impairment test is conducted. Would the asset be tested for impairment before or after amortizing the copyright in 2014?


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  • CreatedSeptember 18, 2015
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