Question

ABC purchased a trademark on Jan 1, 2016 for $877715 with an indefinite useful life On Dec 31, 2020 changes in the marketplace indicate that it may be more likely than not that the trademark is impaired On Dec 31, 2020 the fair value of the trademark is estimated to be $905354 On Dec 31, 2020 the trademark should be on the books at:

Answer 1

On Dec 31, 2020 the trademark should be on the books at:$ 877,715

The fair value of trademark is increasing hence there is no impairment loss.

Impairment loss is recorded when book value of an asset is less than its market value or net realizable value.

Indefinite lived intangible asset is not amortized and the carrying value will be lower than cost only if there is any impairment loss. No profit is recognized when fair value is more than carrying value but if there was an impairment recorded earlier then it will be reversed upto cost of asset.