US CMA Part 1 · Chapter 1 · Question 14 of 23
Under IFRS, an asset has a carrying amount of $500,000. Its fair value less costs of disposal is $430,000 and its value in use is $455,000. What impairment loss should be recognized?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $45,000
Explanation
IAS 36 uses a one-step test: the asset is written down to its recoverable amount, which is the higher of fair value less costs of disposal ($430,000) and value in use ($455,000). Recoverable amount = $455,000, so the loss = $500,000 - $455,000 = $45,000.
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