In the question, we expected to calculate impairment loss under U.S.GAAP, the impairment loss should be carrying amount-fair value, instead of carrying amount-recoverable amount, which is IFRS's requirement. I am confused with the answer, please explain it, thank you.
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Under U.S. GAAP, an asset is considered to be impaired when the total of undiscounted future cash flows from that asset is less than its net carrying value.
If an asset is impaired (total of undiscounted future cash flows is less than net carrying value), the impairment loss is calculated by subtracting the fair value of the asset from its net carrying value.
Therefore, impairment loss to be reported under U.S. GAAP is $50,000 ($750,000 - $700,000).
The correct answer is d.
Under IFRS, an asset is considered to be impaired when the asset's recoverable amount is less than its net carrying value. Impairment loss under IFRS is calculated by subtracting the recoverable amount from the net carrying value of the asset.
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