In 2010, Mennorah Corporation acquired production machinery at a cost of $490,000, which now has a book value of $200,000. The sum of undiscounted future cash flows from use of the machinery is $180,000, and it's fair value is $120,000. What amount should Mennorah recognize as a loss on impairment?

Question

Quizplus · Accepted Answer

The impairment loss is calculated as the difference between the book value ($200,000) and the fair value ($120,000), resulting in a loss of $80,000.

In 2010, Mennorah Corporation Acquired Production Machinery at a Cost