Devo Co Has an Indefinite-Life Intangible Asset with a Carrying Value

question 90

Multiple Choice

Devo Co. has an indefinite-life intangible asset with a carrying value of $783,000. The undiscounted future cash flows expected to be realized from that asset total $830,000; the discounted cash flows are $574,000; and the fair value of the asset has been determined to be $657,000. What is the new carrying value of the asset after the impairment loss has been recorded?

• A) $830,000
• B) $657,000
• C) $574,000
• D) $126,000

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Definitions:

Accounting Equation

Represents the fundamental relationship in accounting: Assets = Liabilities + Equity, ensuring a balance in a company's financial statements.

Owner's Equity

The residual interest in the assets of the entity after subtracting liabilities, essentially representing the owner's claim against the company's assets.

Initial Investment

The initial amount of money put into a project or venture at its inception.

Computer Equipment

Hardware used in the processing, storage, and display of data, including computers, servers, monitors, and related peripherals.