Question 1

Sunwise Real Estate Investment Trust (Sunwise) owns commercial real estate across Canada. Charles, Sunwises controller, is preparing its financial statements for its December 31, 2020, year end. Charles has received information from the CFO that one of Sunwises strip malls may be impaired. The strip mall is located next to the town hall, which has been the centre of citizen protests for over six months. Almost all of the tenants have moved out of the mall and the CFO noted that recent properties sold nearby have shown that prices have decreased dramatically. Information on the building is provided below:

Building cost	$2,200,000
Accumulated depreciation	(950,000)
Carrying value	$1,250,000
Undiscounted future cash flows from the building	$800,000
Discounted cash flows from the building	660,000
Estimate fair value	420,000
Estimated costs of disposal	25,000

What is the impairment that Sunwise should record in 2020 for the strip mall, assuming Sunwise reports under IFRS?

Question 1 options:

A	$855,000
B	$450,000
C	No impairment loss should be recorded, as Sunwise is not required to test the strip mall for impairment.
D	$590,000