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SAS Computers owns a patent on a computer processor. The processor was developed and capitalized at...

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Accounting

SAS Computers owns a patent on a computer processor. Theprocessor was developed and capitalized at a cost of €2,100,000 inthe beginning of 2015. It was expected to be economically usefulfor 7 years and have no residual value. At the beginning of 2018, anew processor was developed, making the old processor worth€900,000 (independent appraiser) with €200,000 total cost to sell.The present value of the processor’s future cash flows, given thedevelopment of the newer processor, is estimated to be €870,000. Atthis point, it is expected to have a useful life of 4 years with noresidual value. Is the processor impaired in 2018? If it isimpaired, prepare the to record the loss. Also prepare the journalentry for amortization in 2018. Show your work.

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Calculation of the book value of the processor at the beginning of the year 2018 Total cost of the processor A 2100000 Life of the processor B 7 Amortisation cost per annum CAB    See Answer
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