Question
JCPenney owns the Liz Claiborne brand name; it purchased the brand name from Liz Claiborne Company for $267.5 million about a decade ago. The
JCPenney owns the Liz Claiborne brand name; it purchased the brand name from Liz Claiborne Company for $267.5 million about a decade ago. The brand name has an indefinite useful life. JCP management conducts its annual impairment test and undertakes a qualitative analysis of the brand name. The analysis suggests that the brand name has a 60% chance of being impaired due to shifting demographics. JCP subsequently estimates the fair value of the brand name as $250 million. Should JCP record an impairment loss on the Liz Claiborne brand name? If so, show the entry to record the loss. If not, explain why not.
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