1. Where in the codification does it discuss impairments for fixed assets?
2. How often is impairment testing conducted?
3. What are the steps in testing for impairment?
4. What is the criteria for determining what levels I should test for impairment?
5. Show a typical journal entry for impairment.

Patent corrections

During the year end audit of Cressman Corporations financial statement for 2017, you discover the following items:

1. Cressman capitalized $75,000 to the patent account at the beginning of 2016 for the cost of a patent. This amount included $50,000 of R&D costs. The patent was amortized over a 20-year life in 2016 and 2017.
2. At the beginning of 2016, Cressman paid its lawyers $8,000 to successfully defend a patent infringement suit regarding the patent in item 1. Cressman debited this cost to legal fees expense.
3. At the beginning of 2016, Cressman purchased a patent for $30,000 from the Baylor Company to prevent potential competition. It recorded the cost in the Patent account and amortized this cost over the remaining legal life of the patent obtained in item 1 (19 years). However, Cresssman agreed to a suggestion by the auditors that the life of the original patent obtained in Item 1 was protected for only 7 more years as of the beginning of 2017.

Required.

Prepare adjusting and correcting journal entries on December 31, 2017. 2016 is a closed year and any adjustments for that period need to be made in 2017.