Exam (elaborations)
D104 - LESSON 13 – IMPAIRMENTS QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
- Course
- Institution
D104 - LESSON 13 – IMPAIRMENTS QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
[Show more]
Content preview
D104 - LESSON 13 – IMPAIRMENTSQUESTIONS AND ANSWERS WITH
SOLUTIONS 2024
When to test for impairment? - ANSWER At least yearly, but whenever factors indicate a potential
impairment
potential circumstances for impairment - ANSWER decrease in asset's market value, change in manner
the asset is used, adverse change in legal factors or in the business climate, accumulation of costs in
excess of the original asset acquisition/construction cost, financial projection/forecast demonstrates
continued losses associated with the asset
impairment - ANSWER there is a loss of utility in the asset and need to write down because of the
conservatism and matching principles.
means the asset's value is permanently gone and cannot be recovered.
Not extraordinary, recorded under Other Expenses and Losses
How to determine if an asset should be impaired? - ANSWER Via the recoverability test.
Determine if future net cash flows are recoverable by comparing the carrying amount of the asset to
future net cash flows.
If future net cash flows > carrying amount, NO IMPAIRMENT.
Else, proceed to step 2, Calculate the impairment loss
How to calculate impairment loss? - ANSWER impairment loss = amount of carrying value over its fair
value
if asset is held and in use:
Impairment loss = (carrying value - fair value)
no reversal of loss
if asset is for sale:
impairment loss = (carrying value - fair value) - cost to sell
no depreciation, but reversal of loss OK
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Performance. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $15.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
73091 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now