Question

Desert Company determined a piece of machinery to be impaired. They make the decision to discontinue use of the machine and hold it for sale. Desert reports the following information as of December 31st for the machine. What do they report for impairment loss on their year-end income statement? Historical Cost 236,716 Accumulated Depreciation 41,812 Fair Value 128,370 Estimated Selling Price 152,163 Estimated Costs to Sell 11,131

Answer 1

$77,665

Step-by-step explanation:

We can calculate the impairment loss by using following formula,

Impairment loss = Carrying amount - Recoverable amount

Where, carrying amount = $236,716 - $41,812

= $194,904

Recoverable Amount = $128,370 - $11,131

= $117,239

By putting the value in the formula, we get

Impairment loss = $194,904 - $117,239

= $77,665