Paper 3 · Statement of changes in equity / impairment

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

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