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Joyson Company owns equipment that cost $900,000 and has accumulated depreciation of $420,000. The expected future net cash flows from the use of the asset are expected to be $500,000. The fair value of the equipment is $400,000. What is the amount of the impairment loss

Answer :

The impairment loss of the equipment is $-80,000.

The impairment loss of an asset is determined by subtracting the asset's carrying value from the fair value of the equipment.

Impairment loss = Fair value of the asset - carrying value of the asset.

The carrying value of an asset is the cost of an asset less the accumulated depreciation.

Carrying value = Cost of the asset - accumulated deprecation

$900,000 - $420,000 = $480,000

Impairment loss = $400,000 - $480,000 = $-80,000

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