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Roi Inc. is a private corporation following ASPE. On Jan 2, 2020 they purchased a limited-life licence for $ 50,000. This licence has a ten-year

Roi Inc. is a private corporation following ASPE. On Jan 2, 2020 they purchased a limited-life licence for $ 50,000.

This licence has a ten-year life and is not renewable. Straight-line amortization will be used.

At December 31, 2021, Roi estimates that the undiscounted net cash flows of this license is $ 38,000, and the fair value (discounted net future cash flows) of this licence is $ 32,000.

Instructions

a) Calculate the amount of impairment (if any) for this asset.

b) Prepare the adjusting entry required to reflect any impairment.

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