Question

ent BACK NE FULL SCREEN PRINTER VERSION CALCULATOR Exercise 147 The following information is available for Gorman Company. 1. Purchased a copyright on January 1, 2017 for $60,000. It is estimated to have a 10-year life. 2. On July 1, 2017, legal fees for successful defense of the copyright purchased on January 1, 2017, were $17,100. Your answer is correct. Prepare the journal entries to record all the events related to the copyright during 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Credit Debit Date January 2, 2017 Copyrights 60,000 Cash 60,000 July 1, 2017 Copyrights 17,100 Cash 17.100 December 31, 2017 Amortization Expense 6,900 Copyrights 6,900

Answer 1

Answer:

JOURNAL ENTRY
Date	Accounts titles and Explanation	Debit ($)	Credit ($)
01-Jan-20	Copyright	60,000
	Cash		60,000
01-Jul-20	Copyright	17,100
	Cash		17,100
31-Dec-20	Amortization Expense (60,000/10) + {(17,100/9.5)*6/12}	6,900
	Copyright		6,900
Amortization in year 2021 = 60,000/10 + 17,100/9.5 = 7,800
carrying Amount = 60,000 +17100-14,700 = $62,400
Recoverable amount = $60,000
fair value=57,000
Since,the carrying Amount is greater than Expected net cash flows,
Amount of Impairment = $62,400 - $57,000= ($5,400)