The Following Information Was Taken from the Fixed Asset Records

question 39

Multiple Choice

The following information was taken from the fixed asset records of Bosco Ltd. as of December 31, 2010: $\begin{array}{llr}\text { Carrying value } & € 100,000 \\\text { Selling price } & € 85,000 \\\text { Costs of disposal } & € 3,000 \\\text { Expected future cash flows } & € 75,000 \\\text { Present value of expected future cash flows } & € 63,000\end{array}$
-What is the amount of impairment loss under U.S.GAAP?

• A)€37,000
• B)€18,000
• C)€15,000
• D)€25,000

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Definitions:

Nominal Interest Rate

The percentage increase in money that the borrower pays the lender, not adjusting for inflation.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling, over a given period of time.

Purchasing Power

the value of currency expressed in terms of the amount of goods or services that one unit of money can buy.

Inflation

The rate at which the general level of prices for goods and services rises, eroding purchasing power.