IV. Intangible Assets: Acquisition, Impairment, and Amortization

Barkley Corp. obtained a trade name in January 2016, incurring legal costs of $72,000. The company amortizes the trade name over 8 years. Barkley successfully defended its trade name in January 2017, incurring $19,600 in legal fees. At the beginning of 2018, based on new marketing research, Barkley determines that the fair value of the trade name is $60,000. Estimated future net cash flows from the trade name are $64,000 on January 1, 2018.

REQUIRED: Prepare all the necessary journal entries for the years ending December 31, 2016, 2017, and 2018 recording acquisition, capitalization, amortization and impairment showing all computations for these 3 fiscal years.

1/1/16: Entry for acquisition

12/31/16: Entry for amortization

1/1/17: Entry(ies) for legal fees

12/31/17: Entry for amortization

12/31/18: (Possible) Entry for impairment

12/31/18: Entry for amortization