An entity is planning to dispose of a collection of assets. The entity designates these assets as a disposal group, and the carrying amount of these assets immediately before classification as held for sale was $20 million. Upon being classified as held for sale, the assets were revalued to $18 million. The entity feels that the fair value less cost to sell would be $17 million. How would the reduction in the value of the assets on classification as held for sale be treated in the financial statements?
(a) The entity recognizes a loss of $2 million immediately before classification as held for sale and then recognizes an impairment loss of $1 million.
(b) The entity recognizes an impairment loss of $3 million.
(c) The entity recognizes an impairment loss of $2 million.
(d) The entity recognizes a loss of $3 million immediately before classifying the disposal group as held for sale.