Exam 12: Long-Term Operating Assets: Departures From Historical Cost

In 2012, TallyHo Farms acquired production machinery at a cost of £400,000. In 2015, when accumulated depreciation was £152,000, Bambung reported an impairment loss of £77,000. Now, in 2019 the machinery has a book value of £141,000. The fair value less selling costs of the machinery is £302,000 and its value in use is £213,000. During impairment testing, Bambung recognized the possibility of a reversal of the previous impairment loss. What amount, if any, should Bambung recognize as a reversal of impairment loss under IFRS?

A loss on impairment of an indefinite-life intangible asset is the difference between the asset's ________.

In 2011, Zee Tee Inc. acquired production machinery at a cost of $630,000, which now has a accumulated depreciation of $380,000. The sum of undiscounted future cash flows from use of the machinery is $260,000. and its fair value is $195,000. What amount should Zee Tee recognize as a loss on impairment?

IFRS allows firms to reverse impairment loss write-downs on property, plant, and equipment but not on finite-life intangible assets.

In 2009, Heisenburg Company acquired production machinery at a cost of €620,000, which now has accumulated depreciation of €345,000. The value in use of the asset is €292,000 and its fair value less cost to sell is €250,000. What amount should Heisenburg recognize as a loss on impairment under IFRS?

When determining the amount of goodwill impairment, the fair value of the reporting unit is its exit price.

The impairment loss for property, plant and equipment equals carrying value less fair value.

If impairment indicators suggest that property, plant and equipment might be impaired, the firm then performs a ________.

U.S. GAAP allows companies to make a qualitative evaluation annually to determine whether it is more likely than not that a reporting unit's goodwill is impaired.

Which of the following is not an impairment indicator for property, plant and equipment?

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

Following U.S. GAAP, a firm recognizing an impairment loss must separately disclose the amount of loss in the income statement.

Under IFRS, value in use of a long-life asset is ________.

Regular Corp. has four divisions. One of them, Yulon Products, was acquired on January 1, 2016, for $89,000,000, and recorded goodwill of $9,000,000 as a result of that purchase. Yulon Products is a reporting unit of the company. At December 31, 2017, Yulon Products had a fair value (including goodwill) of $68,000,000. The book value of the division's net assets (including goodwill) at December 31, 2017 was $79,000,000. What was the impairment loss for goodwill at December 31, 2017?

Under IFRS, when recording an impairment loss for a long-term operating asset, the firm eliminates the balance in the accumulated depreciation or accumulated amortization account, and then reduces the asset account.

In 2011, Yondoor Inc. Company acquired production machinery which now has a book value of $750,000. The sum of undiscounted future cash flows from use of the machinery is $370,000. and it's fair value is $305,000. Yondoor has determined that an impairment loss has occurred. What is the carrying value of the machinery after the journal entry to record the impairment loss has been recorded?

When testing for the impairment of goodwill under IFRS, the recoverable amount of the cash-generating unit is calculated as ________.

In 2011, Zee Tee Inc. acquired production machinery at a cost of $650,000, which now has a accumulated depreciation of $390,000. The sum of undiscounted future cash flows from use of the machinery is $220,000. and its fair value is $194,000. What amount should Zee Tee recognize as a loss on impairment?

Under IFRS for impairment testing, the smallest identifiable group of assets that provides cash inflows is called a(n) ________.

In 2017, Yumster Company determined that a production machine used in its operations was impaired and an impairment loss of $110,000 was recognized. In 2017, the fair value of the asset increased by $170,000 due to an unexpected resurgence in demand for the products the machine was designed to produce. How would the gain due to increase in fair value be recognized in 2017?