Fryer Inc.owns equipment for which it paid $90 million.At the end of 2016,it had accumulated depreciation on the equipment of $27 million.Due to adverse economic conditions,Fryer's management determined that it should assess whether an impairment loss should be recognized for the equipment.The estimated undiscounted future cash flows to be provided by the equipment total $60 million,and the equipment's fair value at that point is $40 million.Under these circumstances,Fryer:

Question

Quizplus · Accepted Answer

To determine if an impairment loss should be recognized, Fryer needs to compare the carrying value of the equipment ($90 million - $27 million = $63 million) to its fair value ($40 million). Since the fair value is less than the carrying value, an impairment loss must be recognized. The amount of the impairment loss is the difference between the carrying value and the fair value, which is $63 million - $40 million = $23 million. Therefore, the correct answer is C.

Fryer IncOwns Equipment for Which It Paid $90 Million