Question - El Dorado Foods Inc. owns a chain of specialty stores in the Pacific Northwest. Recently, four of the stores have experienced declining profits due to market saturation in the area. As a result, management gathered data about possible impairment of the assets of the stores. The information gathered was as follows:
Book value: $17.5 million
Fair value: $14.9 million
Undiscounted sum of future cash flows: $16.5 million
Required: Determine the amount, if any, of the impairment loss that El Dorado must recognize on these assets.
$1 million
$1.6 million
$14.9 million
$2.6 million