A company, Alpha Investments, has acquired a 40% stake in Beta Corp for $5 million. After one year, Beta Corp's fair value falls to $3 million due to poor market conditions. Alpha's management is considering whether to record an impairment on its investment in Beta Corp.
According to IFRS, an investment is considered impaired when its carrying amount exceeds its recoverable amount. The recoverable amount is defined as the higher of the fair value less costs of disposal and the value in use. Alpha Investments must determine the appropriate action regarding this impairment and its impact on financial statements.
Which of the following statements accurately describes the impairment assessment process for this investment?