Impairment; property, plant, and equipment
Response to the following problem:
Collison and Ryder Company (C&R) has been experiencing declining market conditions for its sportswear division. Management decided to test the assets of the division for possible impairment.
The test revealed the following: book value of division's assets, $26.5 million; fair value of division's assets, $21 million; sum of estimated future cash flows generated from the division's assets, $28 million.
What amount of impairment loss should C&R recognize?