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25 December, 00:43

Presented below are two independent cases related to available-for-sale debt investments. Case 1 Case 2 Amortized cost $41,640 $91,800 Fair value 32,220 102,220 Expected credit losses 27,360 83,660 For each case, determine the amount of impairment loss, if any.

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  1. 25 December, 04:41
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    Case 1 = $9,420

    Case 2 = 0

    Explanation:

    Determining the amount of impairment loss is given below:-

    Case 1

    Impairment loss = Amortized cost - Fair value

    = $41,640 - $32,220

    = $9,420

    Case 2

    Impairment loss = Amortized cost - Fair value

    = 91,800 - $102,220

    = 0

    Since, the fair value is higher than Amortized cost so the value of Impairment loss in case 2 is 0.
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