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16 February, 05:13

BE12.6 (LO 4) 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. The fair value of the patent is $110,000. Prepare Kenoly's journal entry, if necessary, to record the loss on impairment.

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  1. 16 February, 07:03
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    Journal Entry to record the impairment loss

    Dr. Cr.

    Impairment $190,000

    Patents $190,000

    Explanation:

    Patent Carrying value = $300,000

    Expects future net cash flows = $210,000

    Fair value of patent = $110,000

    The loss on impairment is calculated by netting off the carrying value of the patent and fair value of patent.

    Loss on Impairment = $300,000 - $110,000 = $190,000
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