A company has some bottling equipment which cost $8.5 million,has a net book value of $4.1 million,estimated future cash flows of $3.7 million,and a fair value of $3.1 million. Which of the following correctly describes the recording of the asset impairment loss?

Question

Quizplus · Accepted Answer

The impairment loss is the difference between the carrying amount of the asset and its fair value. In this case, the carrying amount is $4.1 million and the fair value is $3.1 million, so the impairment loss is $1.0 million. The loss account is debited for the impairment loss and the asset account is credited for the same amount.

A Company Has Some Bottling Equipment Which Cost $8