Transcribed Image Text
In: AccountingOn January 1, 2020 (the first day of its fiscal year) WildhorseLtd. acquired a patent...On January 1, 2020 (the first day of its fiscal year) WildhorseLtd. acquired a patent which gave the company the right to use aproduction process. The process met the six criteria forcapitalization as an intangible asset. Below is a listing of theevents relating to the patent over the five fiscal years from 2020through 2024:2020:?on January 1, acquired the patent for the production processfrom its inventory for a cash payment of $17,400,000, anddetermined that the process had an indefinite useful life.?on December 31, tested the patent for impairment and determinedthat its fair value was $18,400,000.2021:?on December 31, tested the patent for impairment and determinedthat its fair value was $15,400,000.2022:?on December 31, tested the patent for impairment and determinedthat its fair value was $16,300,000.2023:?on January 1, determined that the useful life of the patent wasno longer indefinite, its carrying amount was recoverable, itsestimated remaining useful life was 7 years, its estimated residualvalue was $0 and the pattern of economic benefits to be obtainedfrom the patent during those 7 years was evenly spread over those 7years.?on December 31, tested the process for impairment andrecoverability and determined that its fair value was $1,000,000and its carrying amount was recoverable.2024:?on December 31, tested the patent for impairment andrecoverability and determined that its fair value was $0 and itscarrying amount was not recoverable.record entry forJan 1, 2020Dec 31,2020Dece 31,2021Dec 31, 2022Dec 31, 2023Dec 31, 2024 (to record amortization expense)Dec 31, 2024 (to record loss on impairment)