Cougar Corp.'s balance sheet includes the following asset:

Equipment................................................... $95,000

Less: accumulated depreciation................... (25,000)

Book value (carrying amount)....................... $70,000

After performing its annual review for impairment, Cougar obtains the following data:

Assets value in use....................................... $58,000

Fair value less disposal costs........................ 62,000

Question #1

Assuming Cougar uses the rational entity impairment model,

a) Calculate the recoverable amount.

b) Calculate the impairment loss.

c) Prepare the entry to record the impairment loss.

Question #1 part B

Assume the same information above, except for the following:

Cougar's review for impairment indicates the following:

Assets value in use.......................................................... $64,000

Fair value less disposal costs........................................... 73,000

a) Calculate the recoverable amount.

b) Calculate the impairment loss.