At the end of 2020, Fong Corporation owns a licence with a remaining life of 10 years and a carrying amount of $535,000. Fong expects undiscounted future cash flows from this licence to total $539,000. The licence’s fair value is $430,500 and disposal costs are estimated to be nil. The licence’s discounted cash flows (that is, value in use) are estimated to be $480,300. Fong prepares financial statements in accordance with IFRS.
Compute the impairment loss, if any at the end of 2020
Assume the recoverable amount is calculated to be $489,100 at the end of 2021. Prepare any related entry that is necessary to recover any impairment loss.
Entry on Dec. 31, 2021
Debit
Credit