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A company owns a machine that is carried at $6,000. It estimates that the machine will yield future cash flows amounting to $5,200, and that the present value of these cash flows is $4,700. The fair value of the machine is believed to be $4,800, while selling costs would total $200. The amount of impairment charged against this asset under IFRS and U.S. GAAP would be closest to: IFRS and U.S. GAAP

A $1,300 and $1,200

IFRS: Compare carrying amount ($6,000) to recoverable amount, which equals the higher of fair value less costs to sell ($4,800 – $200 = $4,600) and value in use ($4,700). Impairment charge equals ($6,000 – $4,700 = $1,300).
U.S. GAAP: Asset is impaired if carrying value exceeds recoverable amount, which equals the total value of undiscounted cash flows expected from the asset.
To measure the impairment loss, compare carrying amount ($6,000) to fair value ($4,800). Impairment charge equals ($6,000 – $4,800 = $1,200).

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