Use the Following Information for Questions

question 119

Multiple Choice

Use the following information for questions.
On January 2, 2011, Ace Inc.purchased a patent with a cost CHF1,880,000, and a useful life of 4 years.At December 31, 2011, and December 31, 2012, the company determines that impairment indicators are present.The following information is available for impairment testing at each year end:
No changes were made in the asset's estimated useful life.
-The company's 2012 income statement will report

• A)Amortization Expense of CHF470,000.
• B)Amortization Expense of CHF470,000 and Loss on Impairment of CHF20,000.
• C)Amortization Expense of CHF470,000 and a Recovery of Impairment of CHF90,000.
• D)Loss on impairment of 380,000.

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Definitions:

Accrued Interest

The interest that has accumulated on a bond or loan but has not yet been paid out to the lender or bondholder.

Note Payable

A written promise to pay a specific amount of money, with or without interest, at a future date.

Total Liabilities

The sum of all financial obligations a company owes to external parties, including long-term and short-term liabilities.