Preparing the necessary journal entries for the year ended

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Question - HBC Ltd is a company incorporated in Singapore, with December 31 year-ends and follows the Singapore Financial Reporting Standards. On 1 January 20X1, it purchased a patent on new vision recognition technology with cash of $40 million. The patent has an expected useful life of 10 years with no residual value. At the end of five years, the fair value of the patent is $18 million. The costs of disposal are $3 million. The present value of future cash flows for the remaining five years is $17 million. The sum of the undiscounted future cash flows for the remaining five years is $19 million.

Required -

(a) Illustrate the accounting for the patent by preparing the necessary journal entries for the year ended 31 December 20X1.

(b) Illustrate the accounting for the patent by preparing the necessary journal entries for the year ended 31 December 20X5. In the process, also determine and explain the amount of impairment loss HBC Ltd would recognise in its books.

Reference no: EM132534211

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