Question 1Which 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 torecoverable 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 beenrecognised.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 wouldhave been if there had been no impairment loss.

Step 1 Impairment of the assets means the downward revaluation of the assets; whenever the carrying…

Answered: Question 1 Which of the following is…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 4MC: Which of the following statements about capitalizing costs is correct? A. Capitalizing costs refers...

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Similar questions

Explain why depreciation on an existing asset is always irrelevant.
LO1 Depreciable cost is the difference between the original cost of the asset and its accumulated depreciation.
Which of the following is true regarding special issues in accounting for long-term assets? A. An assets useful life can never be changed. B. An assets salvage value can never be changed. C. Depreciation expense calculations may need to be updated using new and more accurate estimates. D. Asset values are never reduced in value due to physical deterioration.
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.
Which of the following statements about depreciation is not true? A. Depreciation does not mirror the actual loss of value over time. B. Depreciation is the allocation of the asset’s cost to expense over the expected years of use. C. If the fair value of the asset increases, depreciation is reversed to reflect the change in value. D. U.S. GAAP requires depreciation methods to be systematic and rational.
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
The gain on impairment loss reversal of an asset which is recognized in profit or loss is computed as the difference between the recoverable amount on date of reversal and the carrying amount on date of reversal the difference between the recoverable amount on date of reversal and carrying amount of the asset had no impairment loss been recognized previously the difference between the carrying amount of the asset had no impairment loss been recognized previously and the carrying amount of the asset on the date of reversal the difference between the carrying amount of the asset had no impairment loss been recognized previously and the recoverable amount on the date of the previous impairment testing.
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.
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
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.
State which statement is true or false The declining-balance method does not deduct the residual value in computing the depreciation base. 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. The impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned. After an impairment loss is recorded for goodwill, the recoverable amount becomes the basis for the impaired asset and is used to calculate amortization in future periods. Internally generated goodwill associated with a business may be recorded as an asset when a firm offer to purchase that business unit has…
According to PFRS 9, impairment gain A. Should result to carrying amount of financial asset in excess of its carrying amount assuming no impairment loss had been recognized previously B. Should result to carrying amount of financial asset in excess of its new recoverable amount C.Is amortized over the remaining term of the receivable D. Is recognized in profit or loss

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