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

question 121

Essay

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%, what is the journal entry to record the loss?

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Definitions:

Learned Taste Aversion

The phenomenon where an individual develops a dislike or avoidance of a particular food after a negative experience, such as sickness, that gets associated with that food.

Trial-And-Error Learning

Trial-and-error learning is a form of problem-solving that involves attempting different solutions and learning from mistakes until the correct solution is found.

Response Control

The ability to regulate one's reactions to external stimuli, often in the context of behavioral psychology.

Twin Brother

A male sibling born during the same childbirth as another child, which could be identical (from one zygote) or fraternal (from two different zygotes).