If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and this reduction is the impairment loss.

Question

Quizplus · Accepted Answer

This statement accurately describes the accounting treatment for an impairment loss. When the recoverable amount (the higher of an asset's fair value less costs to sell and its value in use) of an asset is less than its carrying amount, the carrying amount is reduced to the recoverable amount, and the difference is recognized as an impairment loss.

If the Recoverable Amount of an Asset Is Less Than