The following information was taken from the fixed asset records of Bosco Ltd. as of December 31, 2010:$\begin{array}{llr}
\text { Carrying value } & € 100,000 \
\text { Selling price } & € 85,000 \
\text { Costs of disposal } & € 3,000 \
\text { Expected future cash flows } & € 75,000 \
\text { Present value of expected future cash flows } & € 63,000
\end{array}$
-Using IAS 36, what is the amount of impairment loss?
A)€18,000
B)€37,000
C)€15,000
D)€25,000

Question

The following information was taken from the fixed asset records of Bosco Ltd. as of December 31, 2010:$\begin{array}{llr}
\text { Carrying value } & € 100,000 \
\text { Selling price } & €  85,000 \
\text { Costs of disposal } & €  3,000 \
\text { Expected future cash flows } & € 75,000 \
\text { Present value of expected future cash flows } & € 63,000
\end{array}$
-Using IAS 36, what is the amount of impairment loss?
A)€18,000
B)€37,000
C)€15,000
D)€25,000

Quizplus · Accepted Answer

The impairment loss is the difference between the carrying value and the fair value of the asset. The fair value is the higher of the selling price and the present value of the expected future cash flows. In this case, the fair value is €63,000, which is lower than the carrying value of €100,000. Therefore, the impairment loss is €37,000.

The Following Information Was Taken from the Fixed Asset Records