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Under IFRS,impairment tests are more frequent for PPE and finite-life intangible assets than for indefinite-life intangible assets.

A) True
B) False

Correct Answer

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Which of the following is not a part of the impairment test of a significant asset?


A) determine the asset's carrying value
B) determine the asset's fair value less costs to dispose
C) determine the fair value of the cash-generating unit without the asset
D) determine the discounted value of the future cash flows expected to be derived from the asset

E) A) and D)
F) A) and C)

Correct Answer

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Companies must disclose the current market value of long-term operating assets held for sale or disposal.

A) True
B) False

Correct Answer

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When an asset is impaired,the firm will determine a new carrying amount based upon its expectation of future economic benefits.

A) True
B) False

Correct Answer

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Long-term asset that is retired from operations and held for disposal or sale are valued at ________.


A) lower of carrying value or net realizable value
B) lower of cost or market
C) value in use
D) replacement cost

E) None of the above
F) A) and B)

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IFRS requires determination of an impairment loss for goodwill ________.


A) when the fair value of the cash-generating unit (including goodwill) is greater than the book value of its net assets (including goodwill)
B) when the book value of the cash-generating unit is greater than its recoverable value
C) annually
D) whenever there are significant impairment indicators

E) A) and B)
F) A) and C)

Correct Answer

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A firm recognizing an impairment loss must separately disclose the amount of loss in the income statement.

A) True
B) False

Correct Answer

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Which of the following is not an impairment indicator?


A) a significant decrease in the purchase price of an asset or asset group scheduled to be acquired in the current period
B) a significant adverse change in legal factors that could affect the value of the asset or asset group
C) a current-period cash flow loss combined with a forecast of continuing losses associated with the use of an asset or asset group
D) a significant decrease in the market price of an asset or asset group

E) All of the above
F) A) and C)

Correct Answer

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Under IFRS,the recoverable value of an asset is ________.


A) the greater of the asset's estimated replacement value and its value in use
B) the greater of the asset's estimated net fair value and its value in use
C) the lesser of the asset's estimated replacement value and its value in use
D) the lesser of the asset's estimated net fair value and its value in use

E) C) and D)
F) A) and B)

Correct Answer

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List four impairment indicators.

Correct Answer

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Any four of the following:• A significan...

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In 2011,Diller Company acquired production machinery at a cost of $860,000,which now has a book value of $380,000.The undiscounted cash flows from use of the machinery is $335,000.and it's fair value is $290,000. a.Determine if an impairment loss has occurred.Explain. b.If an impairment loss has occurred,provide the journal entry to record the impairment loss.

Correct Answer

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a.
The undiscounted cash flows of $335,...

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Asset grouping is similar under U.S.GAAP and IFRS.

A) True
B) False

Correct Answer

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U.S.GAAP requires an impairment test for goodwill if ________.


A) the fair value of the reporting unit (including goodwill) is greater than the fair value of its net assets (without goodwill)
B) the fair value of the reporting unit (including goodwill) is less than the fair value of its net assets (without goodwill)
C) the fair value of the reporting unit (including goodwill) is less than the book value of the reporting unit (without goodwill)
D) the fair value of the reporting unit (including goodwill) is less than the book value of the reporting unit (including goodwill)

E) B) and C)
F) C) and D)

Correct Answer

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IFRS requires an impairment test for goodwill at least annually.

A) True
B) False

Correct Answer

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Determining the amount of goodwill impairment is a one-step impairment test.

A) True
B) False

Correct Answer

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Under the IFRS one-step impairment test,an assets recoverable value is its fair value or its value in use,whichever is lower.

A) True
B) False

Correct Answer

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Under IFRS,the firm may base impairment test for an asset group called a reporting unit.

A) True
B) False

Correct Answer

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Impairment testing for goodwill is the same as impairment tests for other indefinite-life assets.

A) True
B) False

Correct Answer

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U.S.GAAP requires that firms must perform an annual impairment test of indefinite-life assets.

A) True
B) False

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When assessing asset impairment,fair value is also referred to as replacement cost.

A) True
B) False

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