Probst Company acquired a trademark several years ago at a cost of $60,000. Probst has never considered
Question:
Probst Company acquired a trademark several years ago at a cost of $60,000. Probst has never considered the trademark to be impaired. However, at the end of 2019, Probst has determined that the trademark is impaired because of a change in market conditions. It estimates that the trademark has a fair value of $40,000 at the end of 2019.
Required:
1. Prepare Probst’s journal entry (if any) to record the impairment of its trademark at the end of 2019.
2. Next Level Assume Probst uses IFRS. If Probst estimates that the cost of selling the trademark is zero but the value-in-use is $45,000, prepare Probst’s journal entry to record the impairment of its trademark at the end of 2019. Explain any differences between the impairment loss calculated under IFRS and the impairment loss calculated under U.S. GAAP.
3. Assume, instead, that Probst estimated that the trademark had a fair value of $70,000 at the end of 2019. How would Probst account for this if it were using (a) U.S. GAAP or (b) IFRS?
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...
Step by Step Answer:
1 Loss on Impairment 20000 a Trademark 20000 a 40000 fair value 60000 cost 2 Under IFRS Probs...View the full answer
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
