Martinez corporation owns a patent that has a carrying amount of $310,000. martinez expects future net cash flows from this patent to total $250,000. the fair value of the patent is $160,000. prepare martinez’s journal entry to record the loss on impairment.

Please find the detailed answer as follows:

Explanation:

Step 1. Given information.

Carrying amount 310.000

Fair Value 160.000

Step 2. Formulas needed to solve the exercise.

Impairment loss = Carrying value - Fair Value

Step 3. Calculation.

Impairment loss = $310.000 - $116.000 = $194.000.

Step 4. Solution.

The carrying amount of $310.000 > fair value of $160.000. To measure the impairment loss, just do CV-FV. hence $310.000 - $116.000 = $194.000.

Loss on impairment $194.000

Patent $194.000

The answer depends on who in the United States you are looking at, but in general I would say that Peter Pundit is WRONG.

One of the results of the Gravity Model is that the bigger the economy is, the more your country will trade with them. There will be an increase in the supply of goods and services so the prices will fall. This will make American consumers happy because they can buy more - in other words American consumers benefit. American industry will now face increased competition which will hurt their bottom line. However, since the EU is trading more, they will also have more money to spend (possibly on American goods - if so then it could help American industry). Also, using comparative advantage the US will make the things they are efficient at making, and Europe will do likewise then trade resulting in more goods for everyone. The US government will also have more revenue through tariffs - American government benefits.

Peter Pundit doesn't take into account that the trade of our goods to the EU will also increase (result from the Gravity Model), that through specialization the EU and the US can both have more goods through trade then they could if they just produced their own things (comparative advantage), and increased revenues for the government through tariffs.

As for what they will trade, this also goes to comparative advantage. We will trade the things that we can make more efficiently than Europe, and they will likewise trade the things that they can make more efficiently.