QUESTION: A company has an intangible asset with a carrying amount of $200,000 and a remaining useful life of 5 years. The company believes that the fair value of the asset is now $300,000. How should the asset be measured and what would be the journal entry?

Solution: There is no adjustment to the carrying amount of the intangible asset.

The journal entry is as follows:

No journal entry is required as there is no adjustment to the carrying amount of the intangible asset.

Explanation:

The intangible asset should be measured using the cost model as the fair value is not a relevant measure of its value since the asset has a remaining useful life. The carrying amount of the intangible asset remains the same at $200,000, and there is no adjustment needed. Therefore, no journal entry is required.