All of the following statements regarding asset impairments are true EXCEPT which one?O After recording the impairment loss, the reduced carrying amount of the asset held for use becomesits new cost basisO An impaired asset held for disposal may not be written upO An impairment loss for an asset held for use may not be restored.An impaired asset held for disposal is treated like inventory, and therefore should be reported at thelower-of-cost or net-reaalizable value.

Asset impairment occurs when the carrying amount of an asset exceeds its recoverable amount. The…

Answered: All of the following statements…

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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Question 1 Which of the following is not correct in relation to the reversal of an impairment loss of an individual asset? If the individual asset is recorded under the cost model, then the increase in the carrying amount is recognised immediately in profit or loss. Where the recoverable amount is less than the carrying amount of an individual asset, the reversal of a previous impairment loss requires adjusting the camying amount of the asset to recoverable amount. When reversing an impairment loss, the carrying amount cannot be increased to an amount in excess of the carrying amount that would have been determined had ne impairmert los been recognised. O For a depreciable asset there needs to be a calculation of carrying amount using the depreciation variables applied before the impairment loss to determine what the carrying amount would have been if there had been no impairment loss.
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.
Which of the following concepts is violated when measuring inventories at the lower of cost and net realizable value? * The concept that assets shall not be carried at an amount in excess of its recoverable amount. O Historical cost concept O Prudence or conservatism concept Offsetting concept
The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale are a. Lesser than cost b. Less than current fair value c. Lesser than carrying amount d. Greater than carrying amount e. Greater than cost
Which is not an expense? A. costs of goods sold or services rendered B. loss on disposal of a noncurrent asset C. write-off of a worthless intangible D. use of entity resources E. answer not given
When an impairment loss occurs, the carrying amount of the asset should be reduced to its a) © Recoverable amount b) Market value c) © Value in use d) • Net present value
Which of the following events could not coincide with the recognition of an expense? O The recognition of a prepaid expense O The recognition of a provision O A decrease in the carrying amount of an intangible asset O The derecognition of inventory O The recognition of an accrued expense
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.
1. For each of the following scenarios, indicate whether a long-term asset has been impaired (Y for yes and N for no) and, if so, the amount of the loss that should be recorded. Prepare any necessary journal entry. Do you have to subtract the carrying amount and value in use amounts for each? For the journal entries, I don't understand which journal entries you have to do, can you please explain, thank you.
An asset is impaired if: O a. The amount to be recovered through use (or sale) of the asset exceeds its carrying amount. O b. Its carrying amount of asset exceeds recoverable amount. O c. Its carrying amount of asset equals its recoverable amount. O d. If it has been upgraded.
1)If an asset value recovers after an impairment loss has been recognized for the asset, what amount of restoration of that loss is recognized?a.The difference between the original cost and the new recoverable amount.b.The difference between the original loss and the new recoverable amount.c.The difference between the carrying amount and the new recoverable amount.d.None of the recovered value is recognized.2) Occasionally, events occur that change an asset's value after purchase. Which of the following is true regarding these changes in value?a.Increases in asset value are recognized.b.Reductions in asset value are recognized.c.Both decreases and increases are recognized.d.Neither decreases nor increases are recognized.
• Compute the Impairment Loss of CGU • Compute the Carrying amount of Inventory, AR, PPE(net), Patent and Goodwill after the Impairment

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