Prepare the journal entry for the asset impairment

Reference no: EM131908650

Problem

M Wolfsheim Shale Co has a patent on extracting oil from shale rock. Unfortunately, several recent non-shale oil discoveries have negatively affected the demand for shale oil tech and company therefore develops the following information to assess whether its patent is impaired, and if so, what the amount of the impairment loss is:

Carrying amount of patent                                       60,000
Sum of the expected net cash flows (undiscounted)    35,000
Fair value of the patent    20,000

prepare the journal entry for the asset impairment, if any.

Reference no: EM131908650

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