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What amount should be recognized as impairment loss

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Question - On January 1, 2019, SME acquired trademark for P3,000,000. The SME expected to continue marketing the line of products using the trademark indefinitely. An analysis provides evidence that the line of trademarked products may generate net cash inflows for an indefinite period. Management is unable to estimate the useful life of the trademark.

In 2022, a competitor unexpectedly revealed a technological breakthrough that is expected to result in a product, that when launched by the competitor, will extinguish demand for SME's patented product line. Demand for SME's patented product line is expected to remain strong until December 2024, when the competitor is expected to launch the new product.

On December 31, 2022, SME assessed the recoverable amount of the trademark at P500,000. SME intended to continue manufacturing the patented products until December 31, 2024.

Required -

1. What is the amortization of trademark for 2022?

a. P300,000

b. P700,000

c. P600,000

d. P0

2. What amount should be recognized as impairment loss for 2022?

a. P900,000

b. P2,500,000

c. P3,000,000

d. P0

Reference no: EM133187256

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