Accounting · Impairment of Assets
An entity owns a specialized machine with a carrying amount of $450,000 at 31 December 20X4. This machine had been previously revalued upwards, and a revaluation surplus of $120,000 exists in equity specifically relating to this asset. At 31 December 20X4, the following information is available: - Fair value less costs of disposal: $280,000 - Value in use: $310,000 How should the impairment loss be recognized in the financial statements for the year ended 31 December 20X4?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1$120,000 charged to the statement of profit or loss and $20,000 debited to the revaluation surplus.
- 2$140,000 debited entirely to the revaluation surplus.
- 3$120,000 debited to the revaluation surplus (OCI) and $20,000 charged to the statement of profit or loss.✓
- 4$140,000 charged entirely to the statement of profit or loss.
Correct answer
$120,000 debited to the revaluation surplus (OCI) and $20,000 charged to the statement of profit or loss.
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