On January 1, 2017 (the first day of its fiscal year) Cheyenne Ltd acquired a patent which gave the company the right to use a production process The process met the six criteria for capitalization as an intangible asset Below is a listing of the events relating to the patent over the five fiscal years from 2017 through 2018 2017 on January 1, acquired the patent for the production process from its inventory for a cash payment of $17,500,000, and determined that the process had an indefinite useful life on December 31, tested the patent for impairment and determined that its fair value was $18,200,000 2018 on December 31, tested the patent for impairment and determined that its fair value was $16,400,000 2019 on December 31, tested the patent for impairment and determined that its fair value was $17,300,000 2020 on January 1, determined that the useful life of the patent was no longer indefinite, its carrying amount was recoverable, its estimated remaining useful life was 8 years, its estimated residual value was $0 and the pattern of economic benefits to be obtained from the patent during those 8 years was evenly spread over those 8 years on December 31, tested the process for impairment and recoverability and determined that its fair value was $17,850,000 and its carrying amount was recoverable 2021 on December 31, tested the patent for impairment and recoverability and determined that its fair value was $0 and its carrying amount was not recoverable Prepare all journal entries related to the patent for the production process Cheyenne will record from January 1, 2017 to December 31, 2021, using the cost recovery impairment model (If no entry is required, select No Entry for the account titles and enter 0 for the amounts Credit account titles are automatically indented when amount is entered Do not indent manually ) Date Debit Credit (To record amortization of Patents) To record Loss on impairment of patent) Date Debit Credit (To record amortization of Patents) To record Loss on impairment of patent)

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Posted on Sep 15, 2024

On January 1, 2017 (the first day of its fiscal year) Cheyenne Ltd. acquired a patent which gave the company the right to use a

On January 1, 2017 (the first day of its fiscal year) Cheyenne Ltd. acquired a patent which gave the company the right to use a production process. The process met the six criteria for capitalization as an intangible asset. Below is a listing of the events relating to the patent over the five fiscal years from 2017 through 2018:

2017:
		on January 1, acquired the patent for the production process from its inventory for a cash payment of $17,500,000, and determined that the process had an indefinite useful life.
		on December 31, tested the patent for impairment and determined that its fair value was $18,200,000.
2018:
		on December 31, tested the patent for impairment and determined that its fair value was $16,400,000.
2019:
		on December 31, tested the patent for impairment and determined that its fair value was $17,300,000.
2020:
		on January 1, determined that the useful life of the patent was no longer indefinite, its carrying amount was recoverable, its estimated remaining useful life was 8 years, its estimated residual value was $0 and the pattern of economic benefits to be obtained from the patent during those 8 years was evenly spread over those 8 years.
		on December 31, tested the process for impairment and recoverability and determined that its fair value was $17,850,000 and its carrying amount was recoverable.
2021:
		on December 31, tested the patent for impairment and recoverability and determined that its fair value was $0 and its carrying amount was not recoverable.

Prepare all journal entries related to the patent for the production process Cheyenne will record from January 1, 2017 to December 31, 2021, using the cost recovery impairment model. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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Date Debit Credit (To record amortization of Patents) To record Loss on impairment of patent) Date Debit Credit (To record amortization of Patents) To record Loss on impairment of patent)