At the end of 2020, Pronghorn Corporation owns a licence with a remaining life of 10 years
Question:
At the end of 2020, Pronghorn Corporation owns a licence with a remaining life of 10 years and a carrying amount of $527,000. Pronghorn expects undiscounted future cash flows from this licence to total $532,000. The licence's fair value is $421,500 and disposal costs are estimated to be nil. The licence's discounted cash flows (that is, value in use) are estimated to be $475,100. Pronghorn prepares financial statements in accordance with IFRS.
Determine if the licence is impaired at the end of 2020.
The licence is not impairedis impaired
at the end of 2020.
any related entry that is necessary. (Credit account titles are automatically indented when the amount is entered.Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Assume the recoverable amount is calculated to be $443,700 at the end of 2021. Determine if the licence is impaired at the end of 2021.
The licence is not impairedis impaired
at the end of 2021.
Prepare any related entry that is necessary. (Credit account titles are automatically indented when the amount is entered.Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)