An asset group is being evaluated for an impairment loss. The following financial information is available for the asset group: Carrying value $100,000,000 Sum of the undiscounted cash flows $95,000,000 Fair value $80,000,000 What amount of impairment loss, if any, should be recognized

The amount of the impairment loss that should be recognized is:

$20,000.

Explanation:

a) Data and Calculations:

Undiscounted cash flows = $95,000

Carrying value =  $100,000

Fair value =              80,000

Impairment loss = $20,000

b) Impairment loss for the asset group is the difference between the fair value and the carrying value.  It is recognized when the fair value declines from the carrying value.  This implies that the calculation to determine the impairment loss is achieved by deducting the fair value from the carrying value.

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

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