C-Stop reports the following information at year-end: $$\begin{array} { | l | r | r | r | }
\hline & { \text { Estimated } } & \
& { \text { Book Value } } & \text { Cash Flows } & { \text { Fair Value } } \
\hline \text { Building } & \$ 500,000 & \$ 380,000 & \$ 360,000 \
\hline \text { Patent } & \$ 35,000 & \$ 40,000 & \$ 38,000 \
\hline \text { Copyright } & \$ 40,000 & \$ 38,000 & \$ 39,000 \
\hline \text { Machine } & \$ 100,000 & \$ 120,000 & \$ 85,000 \
\hline
\end{array}$$ Based on the above information, what is the total amount of impairment loss that C-Stop should record at year end?

Question

C-Stop reports the following information at year-end: $$\begin{array} { | l | r | r | r | } 
\hline &  { \text { Estimated } } & \
&  { \text { Book Value } } & \text { Cash Flows } &  { \text { Fair Value } } \
\hline \text { Building } & \$ 500,000 & \$ 380,000 & \$ 360,000 \
\hline \text { Patent } & \$ 35,000 & \$ 40,000 & \$ 38,000 \
\hline \text { Copyright } & \$ 40,000 & \$ 38,000 & \$ 39,000 \
\hline \text { Machine } & \$ 100,000 & \$ 120,000 & \$ 85,000 \
\hline
\end{array}$$ Based on the above information, what is the total amount of impairment loss that C-Stop should record at year end?

Quizplus · Accepted Answer

The impairment loss is calculated as the difference between the book value and the fair value when the book value exceeds the fair value. For the building, the impairment loss is $500,000 - $360,000 = $140,000. For the machine, the impairment loss is $100,000 - $85,000 = $15,000. The total impairment loss is $140,000 + $15,000 = $155,000. However, the correct choice is $141,000, indicating a possible error in the options or the calculation.

C-Stop Reports the Following Information at Year-End Based on the Above Information, What Is the Total Amount