What should be the accounting treatment for an impairment loss on assets held for sale?

For assets held for sale, an impairment loss must be expensed immediately in the period that the impairment is identified. This accounting treatment aligns with the guidance in accounting standards which state that when the carrying amount of an asset exceeds its fair value less costs to sell, the asset is considered impaired.

By recognizing the impairment loss immediately, the financial statements accurately reflect the diminished value of the asset and ensure that the financial reporting is transparent and reliable. This immediate expensing affects the income statement, reducing net income and thereby providing users of the financial statements with relevant information regarding the asset's current value and the company's financial position.

The other choices do not align with the standards for impairment of assets held for sale. Capitalizing an impairment loss would inflate the asset's value beyond its recoverable amount. Restoration of impairment is generally not permitted under current accounting principles, and reporting in other comprehensive income does not apply to impairment losses, as they are recognized in net income.