Native Corporation Has Determined That One of Its Finite-Life Intangible

question 17

Multiple Choice

Native Corporation has determined that one of its finite-life intangible assets is impaired. The asset's net carrying value on the date of impairment is $1,250,000. In order to estimate impairment, the company uses the discounted cash-flow model. The company projects the asset's future cash flows as follows: $$\begin{array} { | c | c | } \hline \text { Future period } & \text { Cash-flow projection } \\\hline \text { Year 1 } & \$ 500,000 \\\hline \text { Year 2 } & \$ 350,000 \\\hline \text { Year 3 } & \$ 200,000 \\\hline \text { Year 4 } & \$ 120,000 \\\hline \text { Year 5 } & \$ 60,000 \\\hline\end{array}$$
Assuming a discount rate of 7%, which of the following is included in the journal entry to record the loss? (Use spreadsheet software or a financial calculator to calculate your answer.)

• A) credit Impairment Loss on Intangible Asset $30,000
• B) debit Accumulated Depreciation $179,421
• C) debit Intangible Asset $30,000
• D) credit Intangible Asset $179,421

---

Definitions:

Routine Positive Messages

Regular communications that convey good news, positive feedback, or affirmative information.

Positive Message

Communication that conveys good news, optimism, or a favorable outcome.

Important Information

Data or facts that are crucial for making informed decisions or understanding a situation.

Resale Information

Data or details about the secondary market of goods, where items are sold again after their initial purchase.