PROBLEM $1(10$ Marks$)$

PART A $(6$ Marks$)$

Cougar Corp.$\text{'}$s balance sheet includes the following information:

Equipment: $$190,000$

Less: accumulated depreciation: $50,000$

Book value $($carrying amount$)$: $$140,000$

And after performing its annual review for impairment, Cougar determines the following values:

Asset$$s value in use: $$116,000$

Fair value less disposal costs: $124,000$

$1.)$

Instructions $(4$ Marks$)$

Assuming Cougar uses the rational entity impairment model,

a$)$ Calculate the recoverable amount.

b$)$ Calculate the impairment loss.

c$)$ Prepare the entry to record the impairment loss.

$2.)$

Assume That the information above except that

Asset$$s value in use: $$128,000$

Fair value less disposal costs: $40,000$

a$)$ Calculate the recoverable amount.

b$)$ Calculate the impairment loss.

c$)$ Prepare the entry to record the impairment loss.

PART B $(4$ Marks$)$

On July $1,2019,$ Bermuda Corp. purchased a patent from Antigua Ltd$.$ for $$60,000.$ On July $1,2022,$ Bermuda paid $$12,000$ for successful litigation in defense of the patent. Bermuda estimates that the useful life of the patent will be $15$ years from the date of acquisition.

Instructions

Prepare a calculation of the carrying value of the patent at December $31,2022.$ Label all calculations.