On January 1, 2020 (the first day of its fiscal year) Culver 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 2020 through 2024: 2020: on January 1, acquired the patent for the production process from its inventory for a cash payment of $17,400,000, 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 $18.400.000. 2021: on December 31, tested the patent for impairment and determined that its fair value was $15,400,000. 2022 on December 31, tested the patent for impairment and determined that its fair value was $16,300,000. 2023: 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 7 years, its estimated residual value was $0 and the pattern of economic benefits to be obtained from the patent during those 7 years was evenly spread over those 7 years. on December 31, tested the process for impairment and recoverability and determined that its fair value was $1,000,000 and its carrying amount was recoverable. 2024: 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 Culver will record from January 1, 2020 to December 31, 2024, using the cost recovery impairment model. (If no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation Jan. 1, 2020 Dec 31, 2020 Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2024 (To record amortization expense) Dec 31, 2024 (To record loss on impairment) On January 1, 2020 (the first day of its fiscal year) Culver 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 2020 through 2024: 2020: on January 1, acquired the patent for the production process from its inventory for a cash payment of $17,400,000, 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 $18.400.000. 2021: on December 31, tested the patent for impairment and determined that its fair value was $15,400,000. 2022 on December 31, tested the patent for impairment and determined that its fair value was $16,300,000. 2023: 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 7 years, its estimated residual value was $0 and the pattern of economic benefits to be obtained from the patent during those 7 years was evenly spread over those 7 years. on December 31, tested the process for impairment and recoverability and determined that its fair value was $1,000,000 and its carrying amount was recoverable. 2024: 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 Culver will record from January 1, 2020 to December 31, 2024, using the cost recovery impairment model. (If no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation Jan. 1, 2020 Dec 31, 2020 Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2024 (To record amortization expense) Dec 31, 2024 (To record loss on impairment)
