Question

It is estimated that the net cash flows to be received from the copyright will be $63,000, and its fair value is $59,850. The accumulated amortization at the end of 2021 was $15,435. Compute the amount of impairment, if any, to be recorded on December 31, 2021. (If there is a loss on impairment, then enter amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Answer 1

The amount of the impairment = $3,150.

Step-by-step explanation:

a) Data and Calculations:

Net cash flows = $63,000

Fair value of copyright = $59,850

Accumulated amortization = $15,435

Impairment gain = $3,150 ($63,000 - $59,850)

b) There is an impairment gain of $3,150 since the net cash flows is higher than the fair value of the copyright. Copyright is an intangible asset and impairment assessment must be conducted yearly.