Which of the following is not likely to be an indicator of possible asset impairment? O evidence of obsolescence or physical damage. O a significant decrease in the asset's market value. O the carrying amount of the entity's net assets is greater than the entity's market capitalization. O costs incurred for asset acquisition or operation are significantly lower than originally expected.

Which of the following is not likely to be an indicator of possible asset impairment? O evidence of obsolescence or physical damage. O a significant decrease in the asset's market value. O the carrying amount of the entity's net assets is greater than the entity's market capitalization. O costs incurred for asset acquisition or operation are significantly lower than originally expected.

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 of the following is a false statement about depreciation? It has no impact on cash It represents the physical deterioration of an asset It exists because of the matching principle Accelerated methods of calculating depreciation are acceptable under GAAP
Which of the following is a CORRECT statement about long-term asset impairment? A. Under U.S. GAAP, an asset that has been written down because of impairment can be written back up if it increases in value in the future. B. An asset is impaired if the net book value is less than the expected future cash flows. C. If an asset is impaired, the expected future cash flows will exceed the fair value of the asset. D. If an asset is impaired, the impairment loss is the difference between the net book value and the fair value.
Indicate whether each of the following statements is true or false. The recoverable amount used to impairment test a long-lived tangible asset is defined as the asset’s fair value less costs to sell. After an impairment loss is recorded, the recoverable amount becomes the basis for the impaired asset and is used to calculate depreciation in future periods. Land acquired for resale or disposal is more appropriately classified as inventory rather than property, plant and equipment.
Indicate whether each of the following statements is true or false. The recoverable amount used to impairment test a long-lived tangible asset is defined as the asset's fair value less costs to sell. After an impairment loss is recorded, the recoverable amount becomes the basis for the impaired asset and is used to calculate depreciation in future periods. Land acquired for resale or disposal is more appropriately classified as inventory rather than property, plant and equipment.
A loss on impairment on a limited life intangible asset is the difference between the asset’s Select one: carrying value and its undiscounted expected future net cash flows. fair value and its net realizable value. fair value and its discounted expected future net cash flows. carrying value and its fair value.
Which of the following statements about the recoverable amount used in the IFRS impairment test of a long-lived asset is false? Group of answer choices The recoverable amount is the lesser of the fair value of the asset less costs to sell or the asset's value in use. If an asset's recoverable amount is higher than the carrying amount, no impairment loss will be reported. After recognizing an impairment of an asset, the firm carries the asset at its recoverable amount. The recoverable amount may be calculated as the discounted value of expected future cash flows from the asset.
q24 Which of the following is NOT a step in impairment testing? Select one: a. Calculate the asset’s carrying amount in the books of the entity b. Sell the asset after if the fair value is greater than the recoverable amount c. Calculate the recoverable amount of the asset d. Assess whether there are circumstances that may indicate that the asset should be impaired.
Impairment of an intangible asset occurs when the book value of an asset is less than the fair value. True O False
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 the case study of Company XYZ's challenges in accounting for goodwill and intangible assets impairment, which factor poses a risk to the value of intangible assets such as patents and software? A) Technological advancements B) Annual amortization C) Lack of impairment testing D) Economic stability
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
The main objective of IAS 36 Impairment of Assets is to prescribe the procedures that should ensure that an entity'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 36 requires 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 and state 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.