Which of the following statement(s) is (are) true? (i) An intangible asset is impaired if the carrying amount is higher than its recoverable amount (ii) Recoverable amount is the asset’s fair value or its value-in-use at the reporting date. (iii) For an intangible asset with infinite useful life, impairment test should be performed only if there is evidence to indicate that an intangible asset has been impaired. (iv) For an intangible asset with finite useful life, impairment test should be performed annually even if there is no evidence that the asset has been impaired. Select one: a. (i), (ii), (iii) and (iv) b. (i) and (ii) only c. (i) and (iv) only d. (i) only

Which of the following statement(s) is (are) true? (i) An intangible asset is impaired if the carrying amount is higher than its recoverable amount (ii) Recoverable amount is the asset’s fair value or its value-in-use at the reporting date. (iii) For an intangible asset with infinite useful life, impairment test should be performed only if there is evidence to indicate that an intangible asset has been impaired. (iv) For an intangible asset with finite useful life, impairment test should be performed annually even if there is no evidence that the asset has been impaired. Select one: a. (i), (ii), (iii) and (iv) b. (i) and (ii) only c. (i) and (iv) only d. (i) only

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 14MC: Which of the following is true regarding special issues in accounting for long-term assets? A. An...

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Question

Q23

Which of the following statement(s) is (are) true?

(i) An intangible asset is impaired if the carrying amount is higher than its recoverable amount

(ii) Recoverable amount is the asset’s fair value or its value-in-use at the reporting date.

(iii) For an intangible asset with infinite useful life, impairment test should be performed only if there is evidence to indicate that an intangible asset has been impaired.

(iv) For an intangible asset with finite useful life, impairment test should be performed annually even if there is no evidence that the asset has been impaired.

Select one:

a. (i), (ii), (iii) and (iv)

b. (i) and (ii) only

c. (i) and (iv) only

d. (i) only

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Indicate whether each of the following statements is true or false. If an intangible asset has its fair value determined in an active market, IFRS permits the use of the revaluation model. Answer If an intangible asset has an indefinite life, no amortization is recorded and no test for impairment is required. Answer When dealing with internally developed intangibles, once the asset is ready for its intended use, any subsequent costs are capitalized.
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.
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.
In accordance with HKAS 36 ‘Impairment of Assets’ which of the following statements are true? (1) Intangible assets with indefinite useful life must be checked annually for evidence of impairment (2) An impairment loss must be recognized immediately in the statement of profit or loss, except that all or part of a loss on a previously revalued asset should be charged against any related revaluation surplus (3) If the fair value less costs to disposal exceeds the carrying amount of an asset there is no need to estimate value in use A. 1, 2 and 3 B. 1 and 3 C. 2 and 3 D. 1 and 2
Which of the following statements is true regarding the amortization of intangible assets? a. Intangible assets with a limited useful life are not amortized.b. The service life of an intangible asset is always equal to its legal life.c. The expected residual value of most intangible assets is zero.d. In recording amortization, Accumulated Amortization is always credited.
Which of the following statements is correct? Question 1 options: a Some intangible assets have physical substance b Intangible assets are always classified as noncurrent assets even in cases where they are part of a disposal group. c The process of recording the expiration of the economic benefits of an intangible asset is called depletion. d Intangible assets can be obtained in one of two ways – external acquisition or internal development
If fair value of an impaired intangible asset recovers after an impairment has been recognized, a restoration gain may be recorded in a subsequent period. O a. True O b. False
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.
Under IFRS, a company that acquires an intangible asset may use the revaluation model for subsequent measurement only if a. The useful life of the intangible asset can be readily determined. b. An active market exists for the intangible asset. c. The cost of the intangible asset can be measured reliably. d. The intangible asset is a monetary asset.
q19 Which statement is INCORRECT regarding recognition of intangible assets? Select one: a. An intangible asset should be initially recorded at cost. b. An intangible asset acquired in exchange of another asset can be recognized at the fair value of the asset given up in exchange. c. An intangible asset can only be recognized if its cost can be measured reliably. d. An intangible asset can be recorded at its fair value if its cost cannot be ascertained.
Under IAS 36 Impairment of Assets, impairment test for an individual asset requires that the carrying amount of the asset be compared to its recoverable amount. According to IAS 36, ‘recoverable amount’ is defined as the higher of two items. Which one of the following correctly describes these two items? a. present value of future cash flows from the asset and fair value of asset less costs of disposal b. future cash flows from the asset and fair value of asset less costs of disposal c. future cash flows from the asset and fair value of asset d. present value of future cash flows from the asset and fair value of the asset
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