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Chapter 12: Q12-7IFRS (page 656)

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.

Short Answer

Expert verified

Recovery of Loss from Impairment = $31,000

Step by step solution

01

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

02

Preparing journal entries 

Date

Particulars

Debit ($)

Credit ($)

Patents
$130,000-$110,000-$11,000

31,000

Recovery of Loss from Impairment

31,000

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