Impairment Loss Formula

Impairment Loss Formula

Impairment loss is calculated by the following formula

Impairment Loss = Carrying Amount – Recoverable Amount

Example

Cost = 120,000

Accumulated Depreciation = 40,000

Recoverable Amount = 70,000

What is Impairment Loss?

Solution

Carrying amount = 120,000- 40,000

= 80,000 (Carrying amount)

Impairment Loss = Carrying Amount – Recoverable Amount

= 80,000-70,000

= 10,000 (impairment Loss)