B is corrent. An impairment occurs when the carrying amount of a long-lived asset exceeds its fair value. However, an impairment loss is only recognized if the carrying amount of the asset is not recoverable. The carrying value is considered not recoverable if it exceeds the sum of the expected value of the undiscounted cash flows of the asset. Since the undiscounted expected future cash flows are $130,000, and the carrying value is $120,000, the company will not report an impairment loss.
A is incorrect. An impairment occurs when the carrying amount of a long-lived asset exceeds its fair value. However, an impairment loss is only recognized if the carrying amount of the asset is not recoverable. The carrying value is considered not recoverable if it exceeds the sum of the expected value of the undiscounted cash flows of the asset. Since the undiscounted expected future cash flows are $130,000, and the carrying value is $120,000, the company will not report an impairment loss.
A is incorrect. An impairment occurs when the carrying amount of a long-lived asset exceeds its fair value. However, an impairment loss is only recognized if the carrying amount of the asset is not recoverable. The carrying value is considered not recoverable if it exceeds the sum of the expected value of the undiscounted cash flows of the asset. Since the undiscounted expected future cash flows are $130,000, and the carrying value is $120,000, the company will not report an impairment loss.
D is incorrect. An impairment occurs when the carrying amount of a long-lived asset exceeds its fair value. However, an impairment loss is only recognized if the carrying amount of the asset is not recoverable. The carrying value is considered not recoverable if it exceeds the sum of the expected value of the undiscounted cash flows of the asset. Since the undiscounted expected future cash flows are $130,000, and the carrying value is $120,000, the company will not report an impairment loss.
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