A company owns a patent with a carrying $($book$)$ value of $$78,000.$ The company expects the future net cash flows $($undiscounted$)$ from the patent to amount to $$65,000.$ The patent has a fair value of $$70,000.$

Required:

a$.$ Explain why the patent is impaired $($i$.$e$.$ the 'recoverability test$).$

b$.$ Determine the amount of the impairment loss.

c$.$ Prepare the necessary journal entry to record the impairment.

d$.$ In which section of the income statement will the impairment loss be reported?