The main objective of IAS 36 Impairment of Assets is to prescribe the procedures that should ensure that anentity's assets are included in its statement of financial position at no more than their recoverable amounts.Where an asset is carried at an amount in excess of its recoverable amount, it is said to be impaired and IAS 36requires an impairment loss to be recognized.Required:Define an impairment loss explaining the relevance of fair value less costs to sell and value in use andstate how frequently assets should be tested for impairment.2.Describe the possible incators of impairment.3. Explain how an impairment loss is accounted for after it has been calculated.

An impairment loss occurs when the carrying amount of an asset exceeds its recoverable amount.…

Answered: The main objective of IAS 36 Impairment…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which is the proper way to report a contingent asset? a. As an asset b. No disclosure and no accrua c. An unrealized revenue d. As a disclosure only
Which of the following statements is true? Question 2 options: a The capitalizable costs of patents are legal fees and other registration costs. b An identifiable tangible asset developed internally is never recognized in the accounts as an asset. c Intangible assets usually have a residual value that must be considered in the amortization of cost. d An intangible asset is usually amortized by a credit to an income account.
Once an asset has been determined to be impaired, the amount of impairment is measured as: The asset's cost minus the fair value The asset's future cash inflows minus the book value The asset's book value minus the fair value The asset's cost minus the book value
1. Find the proper FASB ASC citation that provides guidance on the measurement of an impairment loss for a long-lived asset. (The citation must follow xxx-xx-xx-xx or xxx-xx-xx-x format)
in calculating an impairment loss, which TWO of the following are correct? Assets should be carried at the higher of their carrying amount and recoverable amount Recoverable amount is the higher of value in use and fair value less costs of disposal Recoverable amount is the lower of value in use and fair value less costs of disposal Assets should be carried at the lower of their carrying amount and recoverable amount
If an entity has elected to use the fair value option for a financial liability; a. It is measured at fair value through other comprehensive income. b. It is measured at fair value through profit or loss. c. It is measured at amortized cost. d. Fair value op don is prohibited for financial liabilities.
Explain the accounting treatment in the event that an impairment review of a non-current asset which has been previously revalued with a revaluation surplus revealed that the non-current asset has suffered an impairment loss.
Which of the following is not a criterion that must be met for an item to be classified as a liability? A certain cash payment will occur in the future. A sacrifice will require the entity’s assets or services. There is a probable future sacrifice. There is a present obligation that results from a past transaction.
With reference to IAS 37, identify the correct statements from the following: I. A contingent asset should be disclosed by note if an inflow of economic benefits is probable. II. Contingent assets must not be recognised in financial statements unless an inflow of economic benefits is virtually certain to arise. III. No disclosure of a contingent liability is required if the possibility of a transfer of economic benefits arising is remote. I and III only I, II and III II and III only I and II only
True or False 6. Entities may apply a simplified approach when recognizing impairment losses on trade receivables7. When there is a significant increase in the credit risk of a financial asset since its initial recognition but there is no objective evidence of impairment, interest revenue is computed on the net carrying amount of the financial asset (i.e. gross carrying amount less loss allowance)8. an entity recognizes impairment gain when there is an improvement in the credit quality of a previously impaired financial asset9.According to IFRS 9, expected credit losses are weighted average of credit losses with the respective risks of a default occurring as the weights10. a financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occured
4. Entity A issues an instrument that is re-purchasable by delivering cash or another financial asset. However, Entity A's and financial liability remain unaltered. delivo 1ssues an instrument that is re-purchasable by
Statement 1: Measurement period is relevant if Fair Value of Net Assets of acquiree includes the recognition of the contingent asset, contingent liability, and assets/liabilities with provisional amounts. Statement 2: Measurement period is relevant for the remeasurement fo all contingent considerations. A. Both Statetements are Correct B. Both Statements are Incorrect C. Only Statement 1 is Correct D. Only Statement 2 is Correct

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