Exercise 12-14 (Part Level Submission) (a) Account Titles and Explanation Debit

Question

Exercise 12-14 (Part Level Submission)

(a)

Account Titles and Explanation

Debit

Credit

Exercise 12-14 (Part Level Submission)

Presented below is information related to copyrights owned by Walter de la Mare Company at December 31, 2014.
Cost $8,537,500 Carrying amount 4,384,600 Expected future net cash flows 4,026,200 Fair value 3,553,400
Assume that Walter de la Mare Company will continue to use this copyright in the future. As of December 31, 2014, the copyright is estimated to have a remaining useful life of 10 years.

Explanation / Answer

Walter De La Mere All Amounts in $ The copyrights need to be carried forward in the Balance Sheet at the lower of these three amounts : Amortisation for 2014 Adjusted Balance Carrying amount 43,84,600 853750 35,30,850 Expected future net cash flows 40,26,200 40,26,200 Fair value 35,53,400 35,53,400 Since the carrying amount is the lowest amongst the three values, no journal entry is to be passed for the impairment of the copyrights in the books of account.

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