Journal entries for impairment of intangible assets (5 points)

Polar Corp., a large, privately held company, is preparing its year-end entries. As senior accountant, you have been asked to prepare the entries related to the company's intangible assets.

Polar currently carries the following intangible assets* on its balance sheet:

Trade name $ 125,000 net of accumulated amortization of $ 75,000

Patent $ 126,000 net of accumulated amortization of $ 54,000

Other intangibles $ 340,000 no amortization recorded

Trademark $ 120,000 net of accumulated amortization of $ 30,000

$ 711,000

*Current year amortization has already been recorded.

The following additional information is available:

After recent negative press releases relating to the technology that underlies the patent, the company has carried out a recoverability test that indicates that the patent's carrying value is higher than its undiscounted future net cash flows. The patent's fair value has now been estimated at $ 84,000.

The item classified as "Other intangibles" relates to research costs that the company incurred in the current year. According to a statement from the company's President, "The costs were incurred with the intention to gain new knowledge. At the moment we don't know exactly how to use this information, but we are confident that eventually we will be able to use it."

Instructions

Based on the information provided, prepare all journal entries that are required to adjust Polar's records as would be required under ASPE. (5 points)