What impairment, if any, exists on this product line? $$\begin{array} { | l | r | }
\hline & \text { Product CDC } \
\hline \text { Original cost } & \$ 5,200,000 \
\hline \text { Accumulated depreciation } & 2,100,000 \
\hline \text { Fair value } & 4,500,000 \
\hline \text { oosts to sell } & 500,000 \
\hline \text { Value in use } & 4,300,000 \
\hline
\end{array}$$
A)$0
B)$900,000
C)$1,200,000
D)$4,000,000

Question

What impairment, if any, exists on this product line? $$\begin{array} { | l | r | } 
\hline & \text { Product CDC } \
\hline \text { Original cost } & \$ 5,200,000 \
\hline \text { Accumulated depreciation } & 2,100,000 \
\hline \text { Fair value } & 4,500,000 \
\hline \text { oosts to sell } & 500,000 \
\hline \text { Value in use } & 4,300,000 \
\hline
\end{array}$$
A)$0
B)$900,000
C)$1,200,000
D)$4,000,000

Quizplus · Accepted Answer

The carrying amount is $3,100,000 ($5,200,000 - $2,100,000). The recoverable amount is the higher of fair value less costs to sell ($4,000,000) and value in use ($4,300,000). Since the recoverable amount ($4,300,000) is higher than the carrying amount ($3,100,000), there is no impairment.

What Impairment, If Any, Exists on This Product Line A)$0 B)$900,000 C)$1,200,000 D)$4,000,000

What Impairment, If Any, Exists on This Product Line A)$0
B)$900,000
C)$1,200,000
D)$4,000,000