Leonard's Jewelry owns a patent with a carrying value of $50 million at the end of 2012.Due to adverse economic conditions,Leonard's management determined that it should assess whether an impairment should be recognized for the patent.The estimated future cash flows to be provided by the patent total $43 million,and its fair value at that point totals $35 million.Under these circumstances,Leonard:

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The carrying value of the patent is $50 million, while its estimated future cash flows are only $43 million. Additionally, the fair value of the patent is only $35 million. This indicates that the patent has suffered an impairment, as its carrying value is greater than the sum of its estimated future cash flows and fair value. The impairment loss is calculated as the carrying value minus the fair value, or $50 million minus $35 million, which equals $15 million. Therefore, Leonard would record a $15 million impairment loss on the patent.

Leonard's Jewelry Owns a Patent with a Carrying Value of $50