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How much is the impairment loss

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Reference no: EM132931751

Question - Artigence Bottling purchased for P800,000 a trademark for a very successful soft drink it markets under the name ALRIGHT!  The trademark was determined to have an indefinite life. A competitor recently introduced a product that is in direct competition with the ALRIGHT! product, thus suggesting the need for an impairment test. Data gathered by Artigence suggest that the useful life of the trademark is still indefinite, but the cash flows expected to be generated by the trademark have been reduced either to P30,000 per year (with a probability of 80%) or to P60,000 per year (with 20% probability). The appropriate risk-free interest rate is 5%. The appropriate risk-adjusted interest rate is 10%.

How much is the impairment loss?

a. 200,000

b. 440,000

c. 80,000

d. 320,000

Reference no: EM132931751

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