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On January 1, 2011, Edmondton Inc.purchased equipment with a cost of €4,500,000, a useful life of 12 years and no salvage value.The Company uses straight-line depreciation.At December 31, 2011, the company determines that impairment indicators are present.The fair value less cost to sell the asset is estimated to be €3,850,000.The asset's value-in-use is estimated to be €3,500,000.There is no change in the asset's useful life or salvage value.
-The 2011 income statement will report Loss on Impairment of

Question

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The loss on impairment is the difference between the carrying value of the asset (cost - accumulated depreciation) and the fair value less cost to sell, which is €650,000 (€4,500,000 - €3,850,000). This loss should be recognized in the income statement for 2011.

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