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For each of the following independent situations described below, calculate the amount of

impairment loss that should be recognized in Company A's December 31, Year 4, financial

statements. Enter in the designated cells the applicable dollar value. If no impairment loss is

recognized, enter a zero (0). Enter all amounts as positive values.

Situation

Impairment loss

1. On December 31, Year 4, Company A estimates that the carrying

amount of its patent may not be recoverable. The patent was

purchased on January 1, Year 1, for $50,000, and its useful life is

110 years. On January 1, Year 3, Company A paid $24,000 in legal

fees for a successful defense of the patent. The sum of the

undiscounted expected future cash flows from the patent and the

patent's fair value on December 31, Year 4, are $40,000 and

$35,000, respectively.

2. Company A bought a trademark 4 years ago on January 1 for

$80,000. The useful life of the trademark is indefinite, and no

impairment loss was previously recognized. On December 31,

Year 4, the company determined that it is necessary to perform

the quantitative impairment test for the trademark. The fair value

of the trademark on that date was $75,000.

3. On January 1, Year 2, Company A purchased a franchise with a

finite useful life of 5 years for $60,000. On December 31, Year 4,

the company estimates that the carrying amount of the franchise

may not be recoverable. The sum of the undiscounted expected

future cash flows from the franchise and the franchise's fair value

on December 31, Year 4, are $25,000 and $22,000, respectively.

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