In 2011, Bellding Inc. acquired production machinery at a cost of £638,000, which now has accumulated depreciation of £384,000. The value in use of the machinery is £198,000. and its fair value less cost to sell is £215,000. What amount should Bellding recognize as a loss on impairment?

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The carrying amount of the machinery is £254,000 (£638,000 - £384,000). The recoverable amount is the higher of value in use (£198,000) and fair value less cost to sell (£215,000). The recoverable amount is £215,000. The impairment loss is the carrying amount (£254,000) minus the recoverable amount (£215,000), which equals £39,000.