XYZ Corporation is a global conglomerate with numerous subsidiaries operating in different countries. The company follows International Financial Reporting Standards (IFRS) for its financial reporting. During the current financial year, one of its subsidiaries experienced a significant decline in its market value due to adverse economic conditions. Which of the following statements regarding the impairment testing of assets under IFRS is correct? A) Under IFRS, impairment testing is only required for tangible assets such as property, plant, and equipment, and intangible assets like goodwill are exempt from impairment testing. B) Impairment testing under IFRS is required annually for all assets, regardless of their carrying amount and market value, to assess any potential diminution in value. C) The recoverable amount of an asset is determined as the higher of its fair value less costs to sell and its value in use, where value in use is calculated based on the present value of future cash flows. D) If an asset's carrying amount exceeds its recoverable amount, the impairment loss recognized under IFRS is always equal to the difference between the carrying amount and the asset's fair value. E) Impairment testing is not applicable to financial assets such as investments in equity securities as they are measured at fair value through profit or loss under IFRS.
Question:
XYZ Corporation is a global conglomerate with numerous subsidiaries operating in different countries. The company follows International Financial Reporting Standards (IFRS) for its financial reporting. During the current financial year, one of its subsidiaries experienced a significant decline in its market value due to adverse economic conditions.
Which of the following statements regarding the impairment testing of assets under IFRS is correct?
A) Under IFRS, impairment testing is only required for tangible assets such as property, plant, and equipment, and intangible assets like
B) Impairment testing under IFRS is required annually for all assets, regardless of their carrying amount and market value, to assess any potential diminution in value.
C) The recoverable amount of an asset is determined as the higher of its fair value less costs to sell and its value in use, where value in use is calculated based on the present value of future cash flows.
D) If an asset's carrying amount exceeds its recoverable amount, the impairment loss recognized under IFRS is always equal to the difference between the carrying amount and the asset's fair value.
E) Impairment testing is not applicable to financial assets such as investments in equity securities as they are measured at fair value through profit or loss under IFRS.
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