How to Calculate Net Carrying Amount of Assets After Impairment Loss

What did Guzzle Limited estimate as an impairment loss against its single cash-generating unit?

a. $50,000

Final answer:

The estimated impairment loss against its single cash-generating unit was $50,000.

Explanation:

Guzzle Limited estimated an impairment loss of $50,000 against its single cash-generating unit. This impairment loss is used to reduce the carrying amount of the asset to its recoverable amount.

Impairment occurs when the carrying amount of an asset exceeds its recoverable amount, and in this case, the impairment loss was estimated at $50,000 for the cash-generating unit.

As a result, the company recognized this impairment loss to reflect the decrease in value of the asset and to ensure the carrying amount is not overstated.