Which of the following is NOT likely to be an indicator of possible asset impairment? Select one: a. evidence of obsolescence or physical damage b. the book value of the entity’s net assets is greater than the entity’s market capitalization c. a significant decrease in the asset's market value d. 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? Select one: a. evidence of obsolescence or physical damage b. the book value of the entity’s net assets is greater than the entity’s market capitalization c. a significant decrease in the asset's market value d. costs incurred for asset acquisition or operation are significantly lower than originally expected

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 7CYBK

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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. WEDNESDAY Save for Later
In accordance with IAS 36 Impairment of Assets, which one of the following is an indicator that an asset may be impaired? a. evidence that the asset is physically damaged b. a fall in interest rates that materially affects the asset’s value in use c. the market capitalisation of the entity is greater than the carrying amount of its net assets d. a decline in the asset’s market value, as would be expected from normal use
Indicate whether each of the following statements is true or false. An impairment loss is the amount by which the carrying amount of the asset exceeds the sum of the expected future cash flows from the use of that asset. Answer The economic performance of an asset being worse than expected can be viewed as an external indicator of impairment of asset values for property, plant and equipment. Answer Under IFRS, an impairment loss can be reversed when estimates change.
Which of the following is a false statement regarding revaluation of PPE?A. Revalued amount is either fair value or depreciated replacement cost.B. If simultaneous revaluation is not possible, revaluation can be done on arolling basis provided revaluation of the class of assets is completed withina short period of time and provided the revaluations are kept up to date.C. The difference between the PPE’s carrying amount and its revalued amount isknown as revaluation surplus and should be presented in the statement ofcomprehensive income, net of applicable tax.D. When an asset's carrying amount is increased as a result of revaluation, theincrease shall always be credited to revaluation surplus regardless of theexistence of previous impairment loss recognized. Which of the following should be included as cost of inventory?A. Depreciation expense of the delivery equipment.B. Depreciation expense of the factory machinery.C. Storage cost of finished goods.D. None from the choices. In…
All of the following are true regarding recovery of impairments for intangible assets except a. After a recovery of impairment has been recognized, the carrying value of the asset reported on the statement of financial position will be the higher of the fair value less cost to sell or the value-in-use. O b. A recovery of impairment will be reported in the "Other income and expense" section of the income statement. C. The amount of the recovery is limited to the carrying value of the asset that would have been reported had no impairment occurred. O d. No recovery of impairment is allowed for goodwill.
Which statement about depreciation is false?a. A major objective of depreciation accounting is to allocate the cost of using an assetagainst the revenues it helps to generate.b. Depreciation should not be recorded in years in which the market value of the asset hasincreased.c. Obsolescence as well as physical wear and tear should be considered when determiningthe period over which an asset should be depreciated.d. Depreciation is a process of allocating the cost of an asset to expense over its usefullife.
MCQ: Choose only the correct answer Which of the following statements is false? (a) Financial Instruments are intangible assets (b) Goodwill is not amortizable (c) Goodwill can be identified only in business combination situation (d) Straightline method is generally used to calculate amortazation Which of the following will not be considered while calculating the depletion base? (a) Acquisition costs (b) Tangible development costs (c) Restoration Costs (d) Intangible development costs Which of the following will not be included into the the original cost of a land? (a) Legal fees (b) Brokers' commision (c) Property taxes (D) Accrued property taxes of previous owner The journal entry to record the transportation cost paid by the purchaser under periodic inventory system is- (a) Inventory Dr. and Cash Cr. (b) Transportation-in Dr. & Cash Cr. (c) Delivery Expense Dr. & Cash Cr. (d) Transportation-Out Dr. & Cash Cr. In case of change in estimate of useful life for a tangible…
What is an impairment loss? A ) The amount by which the carrying amount of an asset exceeds the book value B ) The amount by which the carrying amount of an asset exceeds the recoverable amount C ) The difference between the fair value of an asset and the net realisable value of the asset D ) The amount by which the market value of an asset exceeds the net present value
7. Which of the following indicators of impairment is considered an internal source of information? a. Significant decline in market value than what is expected as a result of passage of time of normal use. b. Significant changes in technological, market, economic or legal environment in which the entity operates or in the market to which an asset is dedicated. c. Carrying amount of the net assets is more than its market capitalization. d. Significant change with adverse effect to the entity has taken place or will take place, which will affect expected use of asset, e.g., discontinuance, disposal, restructuring plans.
When identifying undervalued and overvalued assets, which of the following statements is least likely accurate?a. An asset is properly valued if its estimated rate of return is below the required rate of return.b. An asset is considered overvalued if its required rate of return is below its estimated rate of return.c. An asset is considered overvalued if its estimated rate of return is below its required rate of return.d. An asset is considered overvalued if its estimated rate of return is above its required rate of return.e. None of the above
Which of the following situations indicates that an asset is impaired?a. The net book value of the asset is less than the asset’s estimated future cash flows.b. The net book value of the asset is more than the asset’s estimated future cash flows.c. The fair market value of the asset is less than the asset’s net book value.d. The fair market value of the asset is more than the asset’s net book value.
Assets intended to be held and used for productive purposes may suffer from impairment in each of the following circumstances except O A change in the way the assets are used or physical change in the assets. O Asset costs incurred exceed the original amounts planned. Discounted expected future cash flows and interest charges are less than the carrying amount of the assets. O A significant adverse change in legal factors that might affect the assets' fair value.