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Q12-7IFRS

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Intermediate Accounting (Kieso)
Found in: Page 656

Short Answer

Use the information in IFRS12-6. Assume that at the end of the year following the impairment (after recording amortization expense), the estimated recoverable amount for the patent is $130,000. Prepare Kenoly’s journal entry, if needed.

Kenoly Corporation owns a patent that has a carrying amount of $300,000. Kenoly expects future net cash flows from this patent to total $210,000 over its remaining life of 10 years. The recoverable amount of the patent is $110,000. Prepare Kenoly’s journal entry, if necessary, to record the loss on impairment.

Recovery of Loss from Impairment = $31,000

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Step by Step Solution

Meaning of Patents 

Patents are a company's most valuable intangible assets, granting specific legal rights to use a process or develop and sell a product. The value of patents rises or falls in accordance with the performance of the business

Preparing journal entries 

Date

Particulars

Debit ($)

Credit ($)

Patents

31,000

Recovery of Loss from Impairment

31,000

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