When the auditor wants to test the asset for impairment, the auditor would most likely be concerned with the recoverable amount of an intangible asset. For this purpose, the recoverable amount of an intangible asset is not: Fair value less cost to sell Value in use Fair value less cost to sell or value in use, whichever is lower Fair value less cost to sell or value in use, whichever is higher

When the auditor wants to test the asset for impairment, the auditor would most likely be concerned with the recoverable amount of an intangible asset. For this purpose, the recoverable amount of an intangible asset is not: Fair value less cost to sell Value in use Fair value less cost to sell or value in use, whichever is lower Fair value less cost to sell or value in use, whichever is higher

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 31CYBK

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Similar questions

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.
When the auditor wants to test the asset for impairment, the auditor would most likely be concerned with the recoverable amount of an intangible asset. For this purpose, the recoverable amount of an intangible asset is not: a. Fair value less cost to sell b. Value in use c. Fair value less cost to sell or value in use, whichever is lower d. Fair value less cost to sell or value in use, whichever is higher
The least effective means for the auditor to determine whether a recorded intangible asset possesses the characteristic of an asset is Vouch the purchase by reference to underlying documentation. Inquire as to the status of the patent application. Evaluate the future revenue-producing capacity of the intangible asset Analyze the research and development expenditures to determine that only those expenditures possessing future economic benefits have been capitalized.
The least effective means for the auditor to determine whether a recorded intangible asset possesses the characteristic of an asset is a. Vouch the purchase by reference to underlying documentation. b. Inquire as to the status of the patent application. c. Evaluate the future revenue-producing capacity of the intangible asset. d. Analyze the research and development expenditures to determine that only those expenditures possessing future economic benefits have been capitalized.
Which of the following statements about the recoverable amount used in the IFRS impairment test of a long-lived asset is false? Group of answer choices The recoverable amount is the lesser of the fair value of the asset less costs to sell or the asset's value in use. If an asset's recoverable amount is higher than the carrying amount, no impairment loss will be reported. After recognizing an impairment of an asset, the firm carries the asset at its recoverable amount. The recoverable amount may be calculated as the discounted value of expected future cash flows from the asset.
Which statement about depreciation is false?a. A major objective of depreciation accounting is to allocate the cost of using an assetagainst the revenues it helps to generate.b. Depreciation should not be recorded in years in which the market value of the asset hasincreased.c. Obsolescence as well as physical wear and tear should be considered when determiningthe period over which an asset should be depreciated.d. Depreciation is a process of allocating the cost of an asset to expense over its usefullife.
True or false _________ Costs incurred that are directly attributable to the acquisition of a PPE may be capitalized in full cost of the asset or allocated in part to noraml operations.__________ When cost of a self-constructed assets is greater than the cost to acquire it from outside sources, the difference is recognized as loss if there is reliable evidences indicating that the cost is materially excessive, because of construction inefficiencies or failures.
Which of the following best describes goodwill impairment in accounting? A) Goodwill impairment occurs when the fair value of a reporting unit exceeds its carrying amount. B) Goodwill impairment is the process of recognizing a decrease in the value of an intangible asset beyond its recoverable amount. C) Goodwill impairment is the recognition of an expense when the carrying amount of goodwill on the balance sheet exceeds its fair value. D) Goodwill impairment occurs when the fair value of a reporting unit falls below its carrying amount, necessitating an adjustment to the goodwill balance.
What are some of the reasons for the impairment of intangible assets such as Goodwill? What are some justifications for treating the write-down as a permanent decline in value of the asset(s)? What are some justifications for considering that there has been a permanent increase in the value of the asset(s)? A difference between the book value and the fair value often exists. What role do technology advances and obsolescence have in deciding that assets have been impaired? Should both decrease and increases in the asset(s) value be reported in the financial statements? Why or why not?
In practice, would you expect the depreciation expense for a non-current asset to be overestimated or underestimated? Explain why this is the case.
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.
A company could change their intention of use for an intangible asset resulting in the asset no longer being considered defensive? If this occurs, what is the impact on the accounting for the intangible asset?