Question

at the end of its 2021 fiscal year, a triggering event caused janero corporation to perform an impairment test for one of its manufacturing facilities. the following information is available: book value $ 65 million estimated undiscounted future cash flows 60 million fair value 50 million the manufacturing facility is:

Answer 1

The manufacturing facility is impaired when the book value exceeds the total of estimated undiscounted future cash flows.

The manufacturing facility has an impairment loss of 15 million dollars because its book value exceeds undiscounted future cash flows.

When fair value exceeds book value, what happens?

An asset's value is "impaired" if its book value is higher than its fair value. Additionally, you are required to include the impairment loss in your income from continuing operations. The impaired asset's carrying value on your balance sheet is also affected by impairment losses.

How is an asset's impairment determined?

Resources are viewed as weakened when the book worth, or net conveying esteem, surpasses expected future incomes. The impairment must be reflected in the financial statements if it is permanent.

Learn more about book value here:

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