Impairment Recognition for Equity Investment

Easy Intercorporate Investments Impairment Of Investments

ABC Corporation owns a 30% equity stake in XYZ Ltd. Due to a significant downturn in the market, XYZ Ltd. reported a substantial loss, leading ABC Corporation to assess its investment for impairment. According to the relevant accounting standards, when should ABC Corporation recognize an impairment loss for its investment in XYZ Ltd.?

When the fair value of the investment falls below its carrying amount.

When XYZ Ltd. announces a loss, regardless of the investment's fair value.

Only when ABC Corporation intends to sell the investment.

Hint

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