Question

The following information relates to an asset Carlisle is using for the business as of December 31, 2024: Cost $600,000 Accumulated depreciation to date 201,250 Expected Future Cash Flows 350,000 PV Expected Future Cash Flows 257,603 Determine the impairment loss, if any, should Carlisle record at December 31, 2024.

Answer 1

$141,147

Step-by-step explanation:

An asset is said to be impaired when the carrying amount is more than the recoverable amount.

The recoverable amount is the higher of the value in use which is the present value (PV) of the future cash flows expected from the use of the asset and the fair value less cost to sell of the asset.

The recoverable amount

= $257,603

Since we are not given the fair value less cost to sell.

Carrying amount of an asset is the difference between the historical cost of the asset and the accumulated depreciation.

= $600,000 - $201,250

= $398,750

Impairment loss

= $398,750 - $257,603

= $141,147