Reference no: EM132887418

Problem - Impairment of Trademark - Probst Company acquired a trademark several years ago at a cost of $60,000. Probst has never considered the trademark to be impaired. However, at the end of 2019, Probst has determined that the trademark is impaired because of a change in market conditions. It estimates that the trademark has a fair value of $40,000 at the end of 2019.

Required -

1. Prepare Probst's journal entry (if any) to record the impairment of its trademark at the end of 2019.

2. Assume Probst uses IFRS. If Probst estimates that the cost of selling the trademark is zero but the value-in-use is $45,000, prepare Probst's journal entry to record the impairment of its trademark at the end of 2019. Explain any differences between the impairment loss calculated under IFRS and the impairment loss calculated under U.S. GAAP.

3. Assume, instead, that Probst estimated that the trademark had a fair value of $70,000 at the end of 2019. How would Probst account for this if it were using

(a) U.S. GAAP

(b) IFRS?