Answer:
King should recognize a loss on impairment of $60,000
Explanation:
In terms of IAS 36, Impairement happens when the Carring Amount of an Asset is <em>Higher</em> than the Recoverable Amount of an Asset.
<u>Recoverable Amount</u>
Recoverable Amount is the Higher of :
(a) Assets Value In Use, and
(b) Fair Value Less Cost to Sell
therefore:
Assets Value In Use = $700,000
Fair Value Less Cost to Sell = $560,000
therefore Recoverable Amount is $700,000 ( higher)
<u>Carrying Amount</u>
Book Value = Carrying Amount = $760,000
<u>Impairement Anaylsis</u>
Carrying Amount ($760,000) > Recoverable Amount ( $700,000)
Recognised Imparement loss is $60,000 ($760,000- $700,000)
