Question

If the carrying amount is $200,000 and recoverable amount is $205000, the impairment amount is:

Select one:

a. $205000

b. No impairment

c. None of the options are correct

d. $200000

e. $5000

Answer 1

As per provision of Accounting, Impairment means declines in the value of Assets due to adverse condition of the market.

So, amount of impairment loss shall equal to excess of carrying amount over its recoverable amount.

in short we can say....Loss of Impairment = [Carrying Amount- Recoverable Amount]

In the above situation carrying amount is less than recoverable amount.

Hence there is no Impairment of loss

Solution- Option b is the right answer.