Based on the following information, what is the impairment booked at December 31, 2021? $$\begin{array} { | l | r | }
\hline \text { Cost } & \$ 750,000 \
\hline \text { Accumulated depreciation } & 300,000 \
\hline \text { Value in use (sum of discounted cash flows) } & 300,000 \
\hline \text { Fair value } & 200,000 \
\hline \text { Disposal costs } & 15,000 \
\hline
\end{array}$$
A)$150,000
B)$185,000
C)$300,000
D)$450,000

Question

Based on the following information, what is the impairment booked at December 31, 2021? $$\begin{array} { | l | r | } 
\hline \text { Cost } & \$ 750,000 \
\hline \text { Accumulated depreciation } & 300,000 \
\hline \text { Value in use (sum of discounted cash flows) } & 300,000 \
\hline \text { Fair value } & 200,000 \
\hline \text { Disposal costs } & 15,000 \
\hline
\end{array}$$
A)$150,000
B)$185,000
C)$300,000
D)$450,000

Quizplus · Accepted Answer

The impairment 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 - $300,000 = $450,000. The fair value less disposal costs is $200,000 - $15,000 = $185,000. Therefore, the impairment is $450,000 - $185,000 = $150,000.

Based on the Following Information, What Is the Impairment Booked