The following information was taken from the fixed asset records of Bosco Ltd. as of December 31, 2010:$\begin{array}{llr}
\text { Carrying value } & € 100,000 \
\text { Selling price } & € 85,000 \
\text { Costs of disposal } & € 3,000 \
\text { Expected future cash flows } & € 75,000 \
\text { Present value of expected future cash flows } & € 63,000
\end{array}$
-What is the amount of impairment loss under U.S.GAAP?

Question

The following information was taken from the fixed asset records of Bosco Ltd. as of December 31, 2010:$\begin{array}{llr}
\text { Carrying value } & € 100,000 \
\text { Selling price } & €  85,000 \
\text { Costs of disposal } & €  3,000 \
\text { Expected future cash flows } & € 75,000 \
\text { Present value of expected future cash flows } & € 63,000
\end{array}$
-What is the amount of impairment loss under U.S.GAAP?

Quizplus · Accepted Answer

Under U.S. GAAP, the impairment loss is calculated as the difference between the carrying value and the fair value (which is the higher of the selling price less costs of disposal or the present value of expected future cash flows). Here, the fair value is €82,000 (€85,000 - €3,000), and the carrying value is €100,000. Thus, the impairment loss is €100,000 - €82,000 = €18,000.

The Following Information Was Taken from the Fixed Asset Records