Based on the following information, what is the recoverable amount for the impairment test? $$\begin{array} { | l | r | }
\hline \text { Cost } & \$ 750,000 \
\hline \text { Accumulated depreciation } & 530,000 \
\hline \text { Value in use (sum of discounted cash flows) } & 230,000 \
\hline \text { Fair value } & 240,000 \
\hline \text { Disposal costs } & 5,000 \
\hline
\end{array}$$
A)$220,000
B)$230,000
C)$235,000
D)$240,000

Question

Based on the following information, what is the recoverable amount for the impairment test? $$\begin{array} { | l | r | } 
\hline \text { Cost } & \$ 750,000 \
\hline \text { Accumulated depreciation } & 530,000 \
\hline \text { Value in use (sum of discounted cash flows) } & 230,000 \
\hline \text { Fair value } & 240,000 \
\hline \text { Disposal costs } & 5,000 \
\hline
\end{array}$$
A)$220,000
B)$230,000
C)$235,000
D)$240,000

Quizplus · Accepted Answer

The recoverable amount is the higher of the value in use ($230,000) and the fair value less costs to sell ($240,000 - $5,000 = $235,000). Therefore, the recoverable amount is $235,000.

Based on the Following Information, What Is the Recoverable Amount