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Prepare journal entries to record the transactions of SME

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Reference no: EM132969619

Question - On January 1, 2020, an SME acquired a trademark for a line of products in a separate acquisition from a competitor for 3,000,000.

The SME expected to continue marketing the line of products using the trademark indefinitely.

An analysis of market, competitive and environmental trend provides evidence that the line of trademarked products may generate net cash inflows for the acquiring entity for an indefinite period.

Management is unable to estimate the useful life of the trademark. In 2023, a competitors  unexpectedly revealed a technological breakthrough that is expected to result in a product, that when launched by the competitor, will extinguished demand for SME's patented product line.

Demand for SME's patented product line is expected to remain strong until December 2025 when the competitor is expected to launch a new product.

On December 31, 2023, SME assessed the recoverable amount of the trademarked at 500,000.

SME intends to continue manufacturing the patented products until December 31, 2025. The financial year-end is December 31.

Required - Prepare journal entries to record the transactions of SME from January 1 , 2020 to December 31, 2023.

Reference no: EM132969619

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