A company has some bottling equipment which cost $8.2 million, has a net book value of $3.8 million, estimated future cash flows of $3.55 million, and a fair value of $2.95 million. How much is the asset impairment loss

Question

Business

Gideon Jenkins

28 February, 11:25

A company has some bottling equipment which cost $8.2 million, has a net book value of $3.8 million, estimated future cash flows of $3.55 million, and a fair value of $2.95 million. How much is the asset impairment loss

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Answers (1)

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Yasmine Holt · Answer 1

The impairment loss of assets amounts to $0.85 million

Explanation:

Asset impairment incur when there is decrease or fall in the fair value of the asset below the recorded cost or net book value of the assets. It is the difference among the assets carrying value and fair value.

The impairment loss of assets is computed as:

Impairment loss of assets = Net book value of asset - Fair value of the asset

where

Net book value of asset amounts to $3.8 million

Fair value of the asset amounts to $2.95 million

So, putting the values above:

Impairment loss of assets = $3.8 million - $2.95 million

Impairment loss of assets = $0.85 million