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

After assessing qualitative factors to determine whether it is necessary to perform the quantitative impairment test for indefinite-life intangibles, the firm will proceed with determining fair value if impairment is deemed reasonably possible.

All intangibles are subject to periodic consideration of impairment with corresponding potential write-downs.

In 2009, Cilla Company acquired production machinery at a cost of $470,000, which now has accumulated depreciation of $280,000. The sum of undiscounted future cash flows from use of the machinery is $120,000 and its fair value is $164,000. What amount should Cilla recognize as a loss on impairment?

Stanvid Company provided the following information: Fair value of the reporting unit, including goodwill $\quad$ $\quad$ $1,400,000 Fair value of the reporting unit, excluding goodwill $\quad$ $\quad$ $1,200,000 Book value of reporting unit, excluding goodwill $\quad$ $\quad$ $\quad$ $1,000,000 Add: Carrying value of goodwill $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ 350,000 Carrying value of the reporting unit, including goodwill $\quad$ $\quad$ $1,350,000 The qualitative assessment of goodwill is completed and it is more likely than not that goodwill is impaired. Describe the process for determining if Stanvid needs to record a goodwill impairment loss and prepare any required journal entries.

Under U.S. GAAP, long-term operating assets can be reported on the balance sheet at fair value instead of historical cost

The first step of the impairment test for property, plant and equipment is assessing asset recoverability.

Under IFRS, the impairment loss on equipment is the difference between the carrying value of the asset and ________.

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

Which of the following statements regarding impairment testing of long-lived operating assets is false?

How do the standards specifying when to test for impairment for indefinite-life intangible assets differ from those standards for finite-life intangible assets?

The journal entry to record an impairment loss for an indefinite-life intangible asset includes which of the following?

Under IFRS, there is never an impairment loss related to goodwill when ________.

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

Doowow Chemical Company determines that an extruder machine used in its operations has suffered an impairment in value because of technological changes. An entry to record the impairment should include ________.

Explain the IFRS impairment test process including determination of the amount of the impairment loss, if any, for property, plant and equipment.

Using IFRS for indefinite-life intangibles, impairment must be tested at least annually, even in the absence of indicators.

Firms assess property, plant and equipment for impairment ________.

Under IFRS, the firm reports a loss from impairment of goodwill when ________.

On December 31, 2017, Plattsville Plastics recently decided to dispose of an extrusion machine. The original cost was $461,000 and accumulated depreciation was $310,566. On December 31, 2017, the fair value of the machine was determined to be $111,000. On December 31, 2018, the fair value of the machine was determined to be $167,000. Which of the following would be included in a related adjusting entry on December 31, 2018?

In 2012, Bambung Corporation acquired production machinery at a cost of £416,000. In 2015, when accumulated depreciation was £110,000, Bambung reported an impairment loss of £78,000. Now, in 2019, the machinery has a book value of £193,000. The fair value less costs to sell of the machinery is £215,000 and its value in use is £195,000. 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?