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### Problem 22-25 (AICPA Adapted)

**Text of the Problem:**

On January 1, 2021, Bair Company purchased a building for $700,000. The building has an estimated life of 40 years and no residual value. The straight-line method of depreciation is used. On January 1, 2027, Bair Company determined the fair value of the building was $1,200,000.

**Required:**

1. What amount should be recognized as impairment loss on December 31, 2027?
   - (a) $0
   - (b) $30,000
   - (c) $140,000
   - (d) $500,000

2. What is the carrying amount of the impaired asset on December 31, 2027?
   - (a) $1,000,000
   - (b) $1,030,000
   - (c) $1,060,000
   - (d) $1,200,000

3. What amount should be recognized as gain on reversal of impairment loss?
   - (a) $0
   -

Explore an accounting problem involving depreciation and impairment loss calculations. Learn how to determine impairment loss and carrying amount of an asset with a step-by-step solution. Suitable for advanced accounting students.

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