Answer:
$35,000
Explanation:
Under IAS 36, an asset is said to be impaired where the carrying amount is more than the recoverable amount.
The recoverable amount is the higher of the fair value less cost to sell or the value in use which is the present value of the expected future cashflow.
Given that;
Carrying Amount = $120,000
Selling Price = $80,000
Costs of Disposal = $5,000
Hence fair value less cost to sell = $80,000 - $5,000 = $75,000
Expected Future Cash Flows = $90,000
Present Value of expected future cash flows = $85,000 ( this is the value in use)
Recoverable amount = $85,000 (since the value in use is higher that the fair value less cost to sell)
This is lower than the carrying amount hence the asset is impaired.
Impairment = $120,000 - $85,000
= $35,000
