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What amount of impairment loss should abc recognize

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Question - ABC Company purchased equipment on January 1, 2004 at cost of $10,000.

The salvage value and useful life were estimated at 0 and 5 years, respectively.

ABC adapted straight-line depreciation method.

On December 31, 2006, an impairment test was performed and showed that the amount of undiscounted future cash flow from the use of the equipment was $3,000.

The fair value of the equipment on December 31, 2006 was $3,500.

What amount of impairment loss should ABC recognize for the year ended December 31, 2006?

1. $1,000

2. $800

3. $600

4. $500

5. $0

Reference no: EM132079229

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