When evaluating whether an asset has been impaired, the carrying amount of the asset must be compared to recoverable amount. Recoverable amount isthe higher ofO Initial Cost and Fair ValueO Original Cost and Net Present ValueO Fair Value Less Cost to Sell and Value in UseO Value in Use and Original Cost Choose the incorrect statement concerning the half-year convention as it applies to depreciation.O It reduces the accelerated nature of the deductionO It adds a vear to the class life of the asset for tax purposesO It can be used only for tax purposesO It results in a depreciation rate equal to the straight-line based on class life in the first year of the asset's life

1) Impairment loss is the amount by which the carrying amount of an asset is exceeds its recoverable…

Vhen evaluatin Ing whethe netner an asset has been impaired, th the higher of O Initial Cost and Fair Value Original Cost and Net Present Value Fair Value Less Cost to Sell and Value in Use Value in Use and Original Cost

Vhen evaluatin Ing whethe netner an asset has been impaired, th the higher of O Initial Cost and Fair Value Original Cost and Net Present Value Fair Value Less Cost to Sell and Value in Use Value in Use and Original Cost

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: When reclassification is made from owner-occupied property to investment property that will be…

A: Any reclassification from owner-occupied property to investment property would be dealt with as per…

Q: Which of the following amounts would be used in calculating a lessee's right of use asset (ROU)? ) O…

A: A lease is a contractual agreement between two parties, the lessor (owner) and the lessee (user),…

Q: Net purchase price of an asset plus all reasonable and necessary expenditures to get it in place and…

A: Depreciation expense: Depreciation expense is the reduction in a particular asset due to its use or…

Q: If the “fair value less cost to sell” of a noncurrent asset held for sale is lower than its carrying…

A: Impairment of an asset is required when there are indication that an impairment loss may have…

Q: Impairment of a long-term operating asset occurs when ________. Group of answer choices an asset or…

A: The objective of the question is to identify the correct scenario under which the impairment of a…

Q: If a company uses the fair value model to value investment property, changes in the fairvalue of the…

A: Under the fair value model, remeasuring of investment property is made at the end of each reporting…

Q: It is the expected selling price of a property when the asset can no longer be used by its owner.…

A: Purchase value of assets is cost of assets purchase plus expenses incurred at the time purchase.

Q: f the value implied by the purchase price of an acquired company exceeds the fair values of…

A: Goodwill refers to an intangible form of asset which arises when a verified buyer acquires or takes…

Q: Explain the historical cost concept as it applies to long-term operational assets. Why is the book…

A: The cost of a fixed asset include every expenses incurred in bringing the asset into present…

Q: If the value implied by the purchase price of an acquired company exceeds the fair values of…

A: Goodwill on acquisition = Purchase consideration paid - Fair value of net identifiable assets…

Q: In which of the following situations would a cost incurred after an asset’s acquisition be…

A: Asset A resource with a monetary value that is owned or managed by a person, company, or nation in…

Q: When an impairment loss occurs, the carrying amount of the asset should be reduced to its a) ©…

A: Impairment: It implies to an increase in the fixed asset's carrying value in relation to the price…

Q: State which statement is true or false The declining-balance method does not deduct the residual…

A: The declining-balance method does not deduct the residual value in computing the depreciation…

Q: hat is the amount realized in a transaction? The gain on the sale of an asset The proceeds less the…

A: Capital gain is realized from the sale of fixed assets.

Q: Question 7 The asset's book value is determined by deducting the residual value from its original…

A: Assets refer to those resources of the organization which are used to generate revenue. Assets are…

Q: The following terms are mismatched with its definitions. Match the terms to its correct definitions.…

A: The terms are matched with the definitions in below table:

Q: When market value of an asset is higher than book value, depreciation is not charged. A) True B)…

A: Meaning of depression. Depreciation is a reduction in the value of asset due to wear and tear,…

Q: Your asset is impaired: its 'fair value less costs to sell' is OMR 4k and its value in use' is OMR…

A: The asset is tested for the impairment loss at least once in a year. The impairment of asset ensures…

Q: Same data in I1, but assuming the use of asset revaluation method, how much is the total asset…

A: Revaluation of assets is done to find out their current or present value on the basis of the net…

Q: An impairment loss is recorded when capital asset's 1. net book value is higher than the amount it…

A: Impairment loss is excess of carrying amount of assets over its recoverable amount . Recoverable…

Q: Biological assets are measured as follows Initial…

A: The biological assets are the assets that include animals and plants.

Q: When accounting for self-constructed PPE and computing the amount of interest cost to be…

A: Self constructed PPE are those Property, Plant and Equipment which is constructed by the business on…

Q: The book value of a plant asset is equal to Select one: the fair value of the asset at the…

A: The book value of a plant asset is a term used in accounting to describe the net value of an asset.…

Q: A loss on disposal

A: The loss on disposal arose when the asset is sold for less than the book value of the asset. The…

Q: Under IFRS, an intangible asset is considered to be impaired if it carrying value is greater than…

A: According to IFRS 13 and Indian Accounting Standard (IAS) 36, an intangible asset is said to be…

Q: If fair value of an impaired intangible asset recovers after an impairment has been recognized,…

A: Intangible Assets -The term "intangible assets" describes recognizable, non-financial assets that…

Q: Match the term on the left to the appropriate description on the right. v Historical cost A. The…

A: 1. In this question we match the write explanation with proper headings.This is match the columns.…

Q: According to HKFRS 5, what is the measurement rule of Non-current assets held for sale? 1. The lower…

A: The HKFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" provide guidance on…

Q: What does it mean the "property and equipment are started at cost"? A. Fair value B.historical…

A: As per IFRS/IAS 16 Property plant and Equipment is to be Initially measured at cost.

Q: fixed asset's estimated value at the time it is to be retired from service is called market value…

A: The fixed assets are the tangible assets which can be measured at cost or revaluation based on…

Q: Indicate whether each of the following statements is true or false. The recoverable amount used to…

A: As per IAS 36,Impairment of assets Recoverable amount is greater of 1. Fair value less cost to sell…

Q: 97. The portion of the acquisition cost of an asset yet to be allocated is known as A. Written down…

A: Acquisition Cost is the value at which the asset is acquired. The cost of acquisition is the total…

Q: A loss on impairment on a limited life intangible asset is the difference between the asset’s…

A: The objective of the question is to identify the correct method for calculating a loss on impairment…

Q: Profit is earned on sale of asset when a. Sale price is less than Accumulated Depreciation b. Sale…

A: Depreciation means the loss in value of assets because of usage of assets , passage of time or…

Q: right of use asset

A: Correct Answer :- C Sale price

Q: An impairment loss for goodwill is calculated as the difference between ________. Group of answer…

A: The objective of the question is to identify the correct method for calculating an impairment loss…

Q: A gain or loss on the sale of a plant asset is determined by comparing the: A.…

A: Solution:- A gain or loss on the sale of a plant asset is determined as follows under:-

Question

When evaluating whether an asset has been impaired, the carrying amount of the asset must be compared to recoverable amount. Recoverable amount is
the higher of
O Initial Cost and Fair Value
O Original Cost and Net Present Value
O Fair Value Less Cost to Sell and Value in Use
O Value in Use and Original Cost

Choose the incorrect statement concerning the half-year convention as it applies to depreciation.
O It reduces the accelerated nature of the deduction
O It adds a vear to the class life of the asset for tax purposes
O It can be used only for tax purposes
O It results in a depreciation rate equal to the straight-line based on class life in the first year of the asset's life

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Property, Plant and Equipment

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

3) Which of the following best describes a depreciation base?7) The acquisition cost of an asset relative to its fair value O The estimated market value of an asset at the end of its useful life O The historical cost of an asset less the depreciation recognized to date O The amount that should be expensed over an asset's useful life
Which of the following statements is correct with respect to the sale of a depreciable asset? Multiple Choice A gain occurs when the selling price exceeds book value. A sale for a gain results in a decrease in total assets. A sale for a loss results in an increase in total assets. A loss occurs when the selling price is more than book value.
Impairment of an intangible asset occurs when the book value of an asset is less than the fair value. True O False
A gain on the disposal of an asset indicates that the asset was sold for more than its fair value. True or False True False
Fair value as a method of asset measurement is defined as: Multiple Choice O O the cost of an asset adjusted for the depreciation or amortization accumulated over its lifetime. price that would be received to sell assets in an orderly transaction between market participants on a given date. the net amount of cash into which an asset could be converted in the ordinary course of business. the value of what is given in exchange for the asset at its initial acquisition.
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
In a replacement analysis, the market value of the currently owned asset a. does not impact the cash flows of the replacement asset(s) in the opportunity cost approach b. does not impact the cash flows of the current asset in the cash flow approach if the current asset is kept c. is treated as a salvage value for the current asset in the cash flow approach if the current asset is kept d. is added to the first cost of the replacement asset(s) in the opportunity cost approach.
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
All financial assets are initially measured at fair value plus transaction costs, except A. Amortized cost C.None of these C. Fair value through profit and loss D. Fair value through OCI
Internally generated intangible assets are initially recorded at fair value. O True O False
Depreciation expense under the invenroty system is a. Based on cost minus residual value b. Basically a FIFO approach to depreciable asset accounting c. The result of applying a depreciation rate to the original cost d. A measure of the change in the value of the depreciable asset
What is the difference between the cost of a fixed asset and its accumulated depreciation called? Group of answer choices book value current value fixed value equity value