Repeat E12 13, but now assume that the licence was granted in perpetuity and has an indefinite life In exercise At the end of 2014, Dayton Corporation owns a licence with a remaining life of 10 years and a carrying amount of $530,000 Dayton expects undiscounted future cash flows from this licence t...

a Under IFRS indefinitelife intangible assets are tested for impairment annually even if there is no ...

Repeat E12-13, but now assume that the licence was granted in perpetuity and has an indefinite life.

Question:

Repeat E12-13, but now assume that the licence was granted in and has an indefinite life.
In exercise
At the end of 2014, Dayton owns a licence with a remaining life of 10 years and a carrying amount of $530,000. Dayton expects undiscounted future cash flows from this licence to total $535,000. The licence's fair value is $425,000 and disposal costs are estimated to be nil. The licence's (that is, value in use) are estimated to be $475,000. Dayton prepares in accordance with IFRS.
Instructions
(a) Determine if the licence is impaired at the end of 2014 and prepare any related entries that are necessary.
(b) Assume the recoverable amount is calculated to be $450,000 at the end of 2015. Determine if the licence is impaired at the end of2015 and prepare any related entries that are necessary.
(c) Explain how the answer to part (b) would change if the licence's fair value is $500,000 at the end of 2015. Financial Statements
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What is Discounted Cash Flows? Discounted Cash Flows is a valuation technique used by investors and financial experts for the purpose of interpreting the performance of an underlying assets or investment. It uses a discount rate that is most... Corporation
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