Part A. As of the end of the fiscal year 2019, Roma Ltd.'s Statement of Financial Position contains (1) a piece of equipment with a carrying value of $100,000, and (2) goodwill with a carrying value of $50,000.

Please describe the procedures that Roma Ltd. needs to follow when deciding if the equipment and the goodwill need to be impaired. Be specific about the conditions when impairment losses need to be recognized. You do not have to consider the possibility of the reversal of impairment. (7')

Part B. Sky Corp.'s satellite division has one equipment and one patent internally generated from research-and-development. On December 1, 2018, the beginning balance of the accounts related to the equipment and the patent is as follows:

Equipment (at cost)

$1,000,000

Accumulated depreciation - Equipment

$100,000

Patent (at cost)

$800,000

Accumulated amortization - Patents

$200,000

The equipment and the patent have never been impaired in the past. Annual depreciation expense for the equipment is $50,000, and annual amortization expense for the patent is $25,000. On December 31, 2018, the equipment has a Fair Value Less Cost of Disposal (FVLCD) of $900,000 and a Value-in-Use (VIU) of $800,000. The patent does not have an active market but the company has determined its VIU to be $550,000 at the end of 2018. Sky Corp. uses the cost model to for the subsequent measurement of both the equipment and the patent.

(a) Show the procedure to decide whether Sky Corp. should impair the equipment and the patent. If yes, calculate the impairment loss. (2')

(b) Please provide the journal entries related to the equipment and the patent at the end of 2018. (6')

For the year of 2019, the patent's amortization expense is $20,000. As of the end of 2019, the equipment has a FVLCD of $750,000 and a VIU of $700,000. The patent has a VIU of $560,000.

(c) Please provide the journal entries related to the equipment and the patent at the end of 2019. (8')