Homework SoursePresented below are two independent cases related to availab
Presented below are two independent cases related to available-for-sale debt investments.
For each case, determine the amount of impairment loss, if any. (If no loss, please enter 0. Do not leave any fields blank.)
| Case 1 | Case 2 | |||
| Amortized cost | $37,020 | $101,200 | ||
| Fair value | 27,060 | 110,650 | ||
| Expected credit losses | 21,600 | 93,050 |
Solution
Answer:
Case-1
Impairment Loss
9960
Case-2
Impairment Loss
0
Explanations to the answer:
Case-1
Impairment Loss
=37020-27060
=$ 9,960
Assets Impairment will occur when fair market value for the fixed assets fall below its carrying value(i.e. Amortized cost) and carrying value is not recoverable
here in case-1 fair market value for the fixed assets fall below its carrying value(i.e. Amortized cost)
Case-2
here in case-2 fair market value for the fixed assets fall more carrying value(i.e. Amortized cost) so No impairment of fixed Assets
| Case-1 | |
| Impairment Loss | 9960 |
| Case-2 | |
| Impairment Loss | 0 |
