An impairment of property, plant, or equipment has occurred if

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An impairment of property, plant, or equipment occurs when the sum of the expected future net cash flows (undiscounted and without interest charges) is less than the carrying value of the asset. This means that the asset is not expected to generate sufficient cash flows in the future to cover its carrying value. Therefore, the carrying value of the asset needs to be reduced to its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. Choices A, B, and C do not accurately describe an impairment of property, plant, or equipment.

An Impairment of Property, Plant, or Equipment Has Occurred If