Paper 3 · June 2019 · Statement of Changes in Equity
An item of machinery had a carrying value of $100 000. It could be sold for $65 000 (fair value less costs to sell), and its value in use was $70 000. What is the impairment loss to be charged against profit for the year?
A$5 000
B$30 000
C$35 000
D$100 000
Explanation
Recoverable amount = higher of $65 000 and $70 000 = $70 000. Impairment loss = carrying value - recoverable amount = $100 000 - $70 000 = $30 000.
Derived from ZIMSEC Accounting Paper 3, June 2019, Q1