IFRS-CH12-Solution - is indicated. The loss is the...

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IFRS – Practice Problem – CH. 12 A) Book value $6.5 million Fair value 3 .5 million Impairment loss 3.0 million B) Because the undiscounted sum of future cash flows of $6.8 million exceeds book value of $6.5 million, there is no impairment loss. C) International standards require an impairment loss to be recognized when an asset’s book value exceeds the higher of the asset’s value-in-use (present value of estimated future cash flows) and fair value less costs to sell. In this case, value-in-use and fair value less costs to sell are the same, $3.5 million. Because book value ($6.5 million) exceeds this amount, a loss
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Unformatted text preview: is indicated. The loss is the difference between book value and the recoverable amount, which also is the higher of the asset’s value-in-use (present value of estimated future cash flows) and fair value less costs to sell. Therefore, the amount of impairment loss is the same as under U.S. GAAP, $3 million. Book value $6.5 million Fair value 3 .5 million Impairment loss 3.0 million An impairment loss also is indicated because book value ($6.5 million) exceeds fair value less costs to sell/value-in-use ($5 million). The amount of impairment loss is $1.5 million....
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This note was uploaded on 11/30/2010 for the course BUSINESS 4230 taught by Professor Dee during the Spring '10 term at Community College of Denver.

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