TAY Research Associates reports the following intangible assets on its December 31 balance sheet:

Requirement a. Compute the impairment loss (if any) for each intangible asset.

Conduct the impairment test indicated for each intangible asset at the end of the year. For each asset, select whether Step 1 of the test is required on the first line. If the test is not required, select "No" on the first line and leave all remaining cells blank in that column, including the "Impairment indicated" cell. (If the test is not required, leave all remaining cells in that column blank.)

Start with step 1.

Step 1:	Franchise	Patent	Trade Name
Step 1 required?
Impairment indicated

Now, complete step 2 of the impairment test for each intangible asset. Select whether step 2 of the test is required on the first line. (If the test is not required, leave all remaining cells in that column blank. However, if the test is required, but no impairment loss exists, then leave only the impairment loss input cell blank in that column. Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round intermediary calculations and your final answers to the nearest whole dollar.)

Step 2:	Franchise	Patent	Trade name
Step 2 required
Impairment loss

Requirement b. Prepare the journal entry necessary to record the impairment loss. (Record debits first, then credits. Exclude explanations from any journal entries. If no entry is required, select "No Entry Required" on the first line of the journal entry table and leave all remaining cells in the table blank.)

First, record any impairment loss on franchise.

Account	Date of impairment

Now, record any impairment loss on patent.

Account	Date of impairment

Next, record any impairment loss on trade name.

Account	Date of impairment

Requirement c. Assuming that

TAY

amortizes its finite-life intangible assets using the straight-line method, with no scrap value, prepare the journal entry to record the annual amortization for the first year subsequent to the impairment write-down. (Record debits first, then credits. Exclude explanations from any journal entries. Round intermediary calculations and your final answers to the nearest whole dollar.)

Record the entry for amortization expense for franchise.

Account	Year after impairment

Finally, record the entry for amortization expense for patent.

Account	Year after impairment

i X Intangible Assets Intangible Asset Net Carrying Value Remaining Life Franchise $ 853,000 5 years Patent 3 years 420,000 3,957,000 Trade name N/A $ 5,230,000 Total It does not use a separate accumulated amortization account for the intangible assets (i.e., it deducts the amount of amortization directly from the intangible asset account). Print Done i More Info Management provided the following information related to intangible assets it obtained during the current year: Franchise: Due to current market conditions, products sold under the franchise have experienced significant sales declines from possible obsolescence. Patent: TAY is currently involved in litigation that will determine if the company has the exclusive right to sell the patented product. Legal counsel informed TAY that the value of the patent will likely be reduced. Trade name: The company is required to test for impairment of its indefinite-life intangible assets annually. TAY's cost of capital is 4%. Management estimates the following future cash flows to be generated over the next five years from the use of its intangible assets: Future Period Franchise Patent Trade Name Year 1 330,000 $ 284,000 $ 810,000 Year 2 260,000 93,500 710,000 Year 3 160,000 13,000 620,000 Year 4 0 47,500 25,500 530,000 374,000 0 Year 5 823,000 $ 390,500 $ 3,044,000 Total i X Intangible Assets Intangible Asset Net Carrying Value Remaining Life Franchise $ 853,000 5 years Patent 3 years 420,000 3,957,000 Trade name N/A $ 5,230,000 Total It does not use a separate accumulated amortization account for the intangible assets (i.e., it deducts the amount of amortization directly from the intangible asset account). Print Done i More Info Management provided the following information related to intangible assets it obtained during the current year: Franchise: Due to current market conditions, products sold under the franchise have experienced significant sales declines from possible obsolescence. Patent: TAY is currently involved in litigation that will determine if the company has the exclusive right to sell the patented product. Legal counsel informed TAY that the value of the patent will likely be reduced. Trade name: The company is required to test for impairment of its indefinite-life intangible assets annually. TAY's cost of capital is 4%. Management estimates the following future cash flows to be generated over the next five years from the use of its intangible assets: Future Period Franchise Patent Trade Name Year 1 330,000 $ 284,000 $ 810,000 Year 2 260,000 93,500 710,000 Year 3 160,000 13,000 620,000 Year 4 0 47,500 25,500 530,000 374,000 0 Year 5 823,000 $ 390,500 $ 3,044,000 Total