The GW Co. is owed $1,000,000 by Mason, Inc. under an 8% note with three years remaining to maturity. The prior year of interest was unpaid. GW believes there is a 30% chance that Mason will fail to pay GW all amounts that GW is owed. In that 30% case, GW believes it will only receive amounts equal to a present value of $880,000.
-If GW is reporting under current U.S. GAAP, it would recognize an impairment loss of:

Question

The GW Co. is owed $1,000,000 by Mason, Inc. under an 8% note with three years remaining to maturity. The prior year of interest was unpaid. GW believes there is a 30% chance that Mason will fail to pay GW all amounts that GW is owed. In that 30% case, GW believes it will only receive amounts equal to a present value of $880,000. 
-If GW is reporting under current U.S. GAAP, it would recognize an impairment loss of:

Quizplus · Accepted Answer

Since it is not probable an impairment has occurred, no loss would be recognized.

The GW Co Is Owed $1,000,000 by Mason, Inc