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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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hyderali230

Answer:

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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