A Canadian printing company that prepares its financial statements according to IFRS has experienced a decline in the demand for its products. The following information (in Canadian dollars)relates to the company's printing equipment as of the current fiscal year end:
| C$ | |
| Carrying value of equipment (net book value） | 500,000 |
| Undiscounted expected future cash flows | 550,000 |
| Present value of expected future cash flows | 450,000 |
| Fair value | 480,000 |
| Costs to sell | 50,000 |
| Value in use | 440,0 |
The impairment loss (in C$) is closest to:
Under IFRS, an asset is considered to be impaired when its carrying amount exceeds its recoverable amount (the higher of fair value less cost to sell or value in use).
Fair value less costs to sell: 480,000 - 50,000 = 430,000
Value in use = 440,000
Recoverable amount (higher value of the above two amounts) = 440,000
Impairment loss under IFRS = Carrying value (net book value) - recoverable amount
Impairment loss = 500,000 - 440,000 = C$60,000