Final answer:
Recovery of impairment is recognized for patents and trademarks, but not for goodwill. Patented inventions and well-respected brand names are barriers to entry not government-enforced. Reputation for price slashing and industry scale could also be barriers to entry.
Step-by-step explanation:
The student's question deals with the recovery of impairment for various intangible assets. According to the accounting standards, goodwill is generally not subject to impairment reversal, meaning once the value of goodwill is impaired, it cannot be written back up in value in the accounting books. Conversely, certain intangible assets like patents (whether held for sale or use) and trademarks can potentially recognize recovery of impairment if specific criteria are met. Thus, recovery of impairment is recognized for all the listed options except for goodwill.
Classification Answers:
- A patented invention is a government-enforced barrier to entry as it provides legal protection preventing others from using the invention without permission.
- A popular but easily copied restaurant recipe is not a barrier to entry as it cannot be legally protected.
- An industry where economies of scale are very small compared to the size of demand in the market doesn’t involve a barrier to entry, as it encourages competition.
- A well-established reputation for slashing prices in response to new entry could be considered a barrier to entry that is not government-enforced since it can deter new competitors.
- A well-respected brand name that has been carefully built up over many years is also a barrier to entry that is not government-enforced as it establishes customer loyalty and can discourage new entrants.