The following information relates to a patent owned by Gentry Company:

Cost: $3,400,000

Carrying amount : 1,700,000

Expected future net cash flow: 1,500,000

Fair value: 1,200,000

Instructions:

(a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2016.

(b) Using the same assumption as part (a) above, prepare the journal entry to record amortization expense for 2017 assuming the asset has a remaining useful life of 3 years at the beginning of 2017.

(c) Using the same assumption as part (a) above, prepare the journal entry (if any) at December 31, 2017, assuming the fair value of the asset has increased to $1,900,000.

(d) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2016, assuming Gentry ceased using the patent at the end of 2016 and intends to dispose of the patent in the coming year. Gentry expects to incur a $10,000 cost of disposal.