Based on the information provided, the fair value of the equipment ($525,000) is lower than its carrying value ($800,000 - $200,000 = $600,000). Therefore, an impairment loss is necessary.
The impairment loss can be calculated by subtracting the fair value of the equipment ($525,000) from its carrying value ($600,000).
Impairment loss = Carrying Value - Fair Value
Impairment loss = $600,000 - $525,000
Impairment loss = $75,000
Therefore, the correct answer is "Impairment loss of $75,000".
Equipment cost is $800,000. Accumulated depreciation is $200,000. Expected future cash flows from the equipment is now $580,000. The fair value of the equipment (discounted cash flows) is $525,000. Which is correct? Group of answer choices
Impairment loss of $20,000
Impairment loss of $75,000
No impairment
Not enough information is provided
1 answer
1 answer