Presented below are two independent cases related to available-for-sale debt investments. Case 1 Case 2 Amortized cost $41,640 $

Question

4 years ago

10

91,800 Fair value 32,220 102,220 Expected credit losses 27,360 83,660 For each case, determine the amount of impairment loss, if any.

1 answer:

netineya [11] · Answer 1 · 2021-11-07T18:07:17+03:00

Answer:

Case 1 = $9,420

Case 2 = 0

Explanation:

Determining the amount of impairment loss is given below:-

Case 1

Impairment loss = Amortized cost - Fair value

= $41,640 - $32,220

= $9,420

Case 2

Impairment loss = Amortized cost - Fair value

= 91,800 - $102,220

= 0

Since, the fair value is higher than Amortized cost so the value of Impairment loss in case 2 is 0.