Based on the following information, what is the recoverable amount for the impairment test?
A)$220,000
B)$230,000
C)$235,000
D)$240,000

Question

Based on the following information, what is the recoverable amount for the impairment test? 
A)$220,000 
B)$230,000 
C)$235,000 
D)$240,000

Quizplus · Accepted Answer

The recoverable amount for the impairment test is the higher of the fair value less costs to sell and the value in use. 
Fair value less costs to sell = $245,000 ($240,000 + $5,000 - $0)
Value in use = $235,000
Therefore, the recoverable amount is $245,000, and the answer is C ($235,000 is not higher and the other options are too high).

Based on the Following Information, What Is the Recoverable Amount