Refer to the information provided in E12-17, but now assume that Venetian Corp. is a publicly accountable company. At December 31, 2014, the copyright's value in use is $1,850,000 and its selling costs are $100,000.
The following information is for a copyright owned by Venetian Corp., a private entity, at December 31, 2014. Venetian Corp. applies ASPE.
Cost .......................$4,300,000
Carrying amount .................. 2,150,000
Expected future net cash flows (undiscounted) ....... 2,000,000
Fair value .................... 1,600,000
Assume that Venetian Corp. will continue to use this copyright in the future. As at December 31, 2014, the copyright is estimated to have a remaining useful life of 10 years.
Instructions
(a) Prepare the journal entry, if any, to record the asset's impairment at December 31, 2014.
(b) Prepare the journal entry to record amortization expense for 2015 related to the copyright.
(c) The copyright's fair value at December 31, 2015, is $2.2 million. Prepare the journal entry, if any, to record the increase in fair value.