Impairment of assets

Hi Mike,

Hope you could help me on this:

As far as I recall, no asset should be impaired to an amount below the highest of:
I. Fair value less costs of disposal
2. Value in use
3. 0

I’ve just looked through BPP study text, online websites and opentuition notes and they all agree to the above point..

MULTIPLEX CO (BPP study text question bank question 7)

On 1 January 2000 multiplex acquired steam, a company that operates a scenic railway along the coast of a popular tourist area. The fair values of steam assets on 1 January 2000 were:

Goodwill 200
Operating license 1,200
Property 300
Rail track 300
2 steam engines 1,000

The operating license is for 10 years. It was renewed on 1 January 2000 by the transport authority and is stated at the cost of its renewal. The carrying values of the property and rail track are based on their value in use. The engines are valued at their net selling prices.

On 1 February 2000 the boiler of one of the steam engines exploded, completely destroying the whole engine. Fortunately no one was injured, but the engine was beyond repair. Due to its age a replacement could not be obtained. Because of the reduced passenger capacity the estimated value in use of the whole of the business after the accident was assessed at $2,000

Calculate the carrying value of the assets of steam at 1 February 2000

The answer allocated $700 of the impairment loss to both goodwill and one of the steam engines, and the remaining $300 to operating license, property and rail track on a pro rata basis. None was allocated to the remaining steam engine, with the explanation of “the engine must not be reduced below its net selling price of $500”

Isn’t the net selling price a realisable value, and not fair value less cost of disposal?
If an asset shouldn’t be impaired below its recoverable amount, then the remaining impairment loss shouldn’t have been allocated to property and rail track, right?