LivePlay Company has incurred \($300,000\) in scenery production costs for the play Cat Trap. It estimates that Cat Trap will run for three years, beginning January 1, 2012. However, to the company’s surprise, it becomes clear in October 2012 that Cat Trap will run for only one year and close on December 31, 2012. By the end of Q3 of 2012, LivePlay had amortized an accumulated amount of \($75,000\) of the scenery production costs of \($300,000\).

Required

a. How much amortization expense or impairment costs should LivePlay Company recognize in respect of the scenery production costs in its income statement in Q4 of 2012?

b. LivePlay has a second play running at another theater. It estimates that the second play, Dogs, will run until December 31, 2014. On October 1, 2012, in its books and records, LivePlay transfers the scenery assets of \($225,000\) from the Cat Trap to the Dogs production in order to avoid fully writing off the asset in its 2012 financial statements.
By how much would LivePlay understate its amortization expense (or its impairment loss) in Q4 of 2012 by falsely transferring the scenery assets from CatTrap to Dogs?