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

Companies should evaluate indefinite life intangible assets at least annually for ________.

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

When a long-term operating asset is impaired, the firm will determine a new carrying amount based upon its expectation of future economic benefits.

Sparkling Company uses IFRS. After 3 full years of use, the Sparkling Company revalues equipment with a carrying value of $990,000 to its fair value of $1,400,000 using the accumulated depreciation elimination method. The original cost of the equipment is $1,300,000 and the equipment has a useful life of 10 years with no scrap value. Sparkling Company depreciates under the straight-line method. How much is the revaluation gain or loss? Where does Sparkling Company report any unrealized gain or loss from the revaluation in the financial statements?

Companies must disclose the current market value of long-term operating assets held for sale or disposal.

Which of the following is not a part of the impairment test of equipment under IFRS?

Which of the following is not a required disclosure requirement for long-term asset impairment under both U.S. GAAP and IFRS?

IFRS requires determination of an impairment loss for goodwill ________.

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

IFRS impairment testing for finite-life intangible assets is similar to impairment testing for tangible long-lived assets.

Which of the following statements is true about assessing recoverability of property, plant and equipment?

Hale Company uses IFRS. After 5 full years of use, Hale Company revalues equipment with a carrying value of $930,000 to its fair value of $1,300,000 using the accumulated depreciation elimination method. The original cost of the equipment is $1,300,000 and the equipment has a useful life of 10 years with no scrap value. Hale Company depreciates under the straight-line method. What is the new annual depreciation expense after the revaluation?

When assessing the impairment of goodwill, the recoverable amount of a cash-generating unit is the greater of its fair value less selling costs or its value in use.

Ponzi Printing Company determines that a printing machine used in its operations has suffered an impairment in value because of technological changes. An entry to record the impairment should include a credit to ________.

A company selling or disposing of a long-term operating asset measures the asset at the lower of cost or net realizable value.

In 2010, Bambung Corporation acquired production machinery at a cost of £414,000, which now has a book value of £191,000. The discounted future cash flows from use of the machinery is £178,000 and its fair value less costs to sell is £156,000. What amount should Bambung recognize as a loss on impairment under IFRS?

Following IFRS, if the impairment loss is greater than the amount of reported goodwill, the firm first reduces the unit's other assets to their fair values, and then subtracts the remaining loss from goodwill.

Devo Co. has an indefinite-life intangible asset with a carrying value of $800,000. The undiscounted future cash flows expected to be realized from that asset total $828,000; the discounted cash flows are $578,000; and the fair value of the asset has been determined to be $647,000. What is the amount of the impairment loss to be recorded, if any?

IFRS allows recoveries of impairment losses for property, plant, equipment and intangible assets. What related disclosures are required and at what organizational level are they required?

Following IFRS, which statement is false?