Question

Calrissian Corporation holds an available-for-sale debt investment. The amortized cost is $40,000; the fair value is $30,000; and expected credit losses are $25,000. What is the amount of the impairment loss

Answer 1

Answer:

Explanation:

The reduction in the value of the asset due to a decrease in the fair value. It means when fair value of the asset lower than the book value of the asset then there is an impairment.

Amortized Cost / Book value = $40,000

Fair Value = $30,000

Debt investment is also impaired as its fair value is less than the amortized cost which is the book value.

Impairment Loss = $40,000 - $30,000

Impairment Loss = $10,000