Question

King Corporation owns machinery with a book value of $760,000. It is estimated that the machinery will generate future cash flows of $700,000. The machinery has a fair value of $560,000. King should recognize a loss on impairment of:_____.

A. $ 60,000.
B. $ 140,000.
C. $200,000.
D. $ -0-.
E. None of the other answers are correct.

Answer 1

C. $200,000.

Step-by-step explanation:

The computation of the impairment loss is shown below:

= Book value of the machinery - fair value of machinery

- $760,000 - $560,000

= $200,000

Hence, the impairment loss is $200,000

Therefore the correct option is c.

We simply applied the above formula so that the correct value could come

And, the same is to be considered