Based on the following information, what is the impairment amount to be recorded? $$\begin{array} { | l | r | }
\hline \text { Cost } & \$ 750,000 \
\hline \text { Accumulated depreciation } & 530,000 \
\hline \text { Value in use (sum of discounted cash flows) } & 130,000 \
\hline \text { Fair value } & 140,000 \
\hline \text { Disposal costs } & 15,000 \
\hline
\end{array}$$
A)$90,000
B)$125,000
C)$130,000
D)$220,000

Question

Based on the following information, what is the impairment amount to be recorded? $$\begin{array} { | l | r | } 
\hline \text { Cost } & \$ 750,000 \
\hline \text { Accumulated depreciation } & 530,000 \
\hline \text { Value in use (sum of discounted cash flows) } & 130,000 \
\hline \text { Fair value } & 140,000 \
\hline \text { Disposal costs } & 15,000 \
\hline
\end{array}$$
A)$90,000
B)$125,000
C)$130,000
D)$220,000

Quizplus · Accepted Answer

The impairment amount is the difference between the carrying amount and the fair value less disposal costs. The carrying amount is the cost less accumulated depreciation, which is $750,000 - $530,000 = $220,000. The fair value less disposal costs is $140,000 - $15,000 = $125,000. Therefore, the impairment amount is $220,000 - $125,000 = $95,000.

Based on the Following Information, What Is the Impairment Amount