In 2010, TallyHo Farms acquired production machinery at a cost of $410,000. In 2

Question

In 2010, TallyHo Farms acquired production machinery at a cost of $410,000. In 2013 when accumulated depreciation was $160,000, Banbung reported an impairment loss of $75,000. Now, in 2017 the machinery has a book value of $140,000. The recoverable amount of the machinery is $235,000. and its value in use is $210,000. During impairment testing, Bambung recognized the possibility of a reversal of the previous impairment loss. What amount, if any, should Bambung recognize as a reversal of impairment loss?

A) $95,000

B) $75,000

C) $40,000

D) $25,000

Explanation / Answer

Impairnment losses will be shown for the assets if the market value of the assets are fall down with comparaision to book value of the assets CALCULATION OF THE REVERSAL OF IMPAIRNMENT VALUE OF MACHIENARY Csot of Machienary in 2010 = 410000 Less: Accuulation depreciation in 2013 = 160000 Book Value of the Machienary in 2013 250000 Less : Write off for impairnment loss = 75000 Now, in 2017 the book value =     1,40,000.00 Add: Earlier Write off as Impairnment ==        75,000.00 Actual Book Value =     2,15,000.00 Currently the recoverable amount of machienary is $ 235,000 it means the all impairnment amount is recovered because the actual book value of the assets is $ 215,000 after add back the impairnemnt value. So we can able to reverse the all impairnment value because all is recovered

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