Question

Vegetarian Delights has been experiencing declining market conditions for its specialty foods division. Management decided to test the operational assets of the division for possible impairment. The test revealed the following: book value of the division's assets, $34.0 million; fair value of the division's assets, $25 million; sum of estimated future cash flows generated from the division's assets, $27 million. What amount of impairment loss should Vegetarian Delights record

Answer 1

Answer: $9 million

Step-by-step explanation:

Based on the information given in the question, the amount of the impairment loss that Vegetarian Delights should record will be calculated as:

Book value of division's asset = $34.0 million

Less: Fair value of divisions asset = $25 million.

Impairment loss = $34million - $25million = $9 million