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