Question 1

Which of the following is an impairment indicator?

Accepted Answer

A) a significant decrease in the purchase price of an asset or asset group scheduled to be acquired in the current period 
B) a significant adverse change in legal factors that could affect the value of the asset or asset group 
C) a significant increase in the purchase price of an asset or asset group scheduled to be acquired in the current period 
D) a significant increase in the market price of an asset or asset group 
A) a significant decrease in the purchase price of an asset or asset group scheduled to be acquired in the current period 
B) a significant adverse change in legal factors that could affect the value of the asset or asset group 
C) a significant increase in the purchase price of an asset or asset group scheduled to be acquired in the current period 
D) a significant increase in the market price of an asset or asset group

Question 2

Which of the following statements is true about assessing recoverability of an asset?

Accepted Answer

A) If the sum of the undiscounted cash flows exceeds the carrying value of the asset,then the asset is impaired. 
B) If the sum of the discounted cash flows exceeds the carrying value of the asset,then the asset is impaired. 
C) If the sum of the undiscounted cash flows exceeds the carrying value of the asset,then the asset is not impaired. 
D) If the sum of the discounted cash flows exceeds the carrying value of the asset,then the asset is not impaired. 
A) If the sum of the undiscounted cash flows exceeds the carrying value of the asset,then the asset is impaired. 
B) If the sum of the discounted cash flows exceeds the carrying value of the asset,then the asset is impaired. 
C) If the sum of the undiscounted cash flows exceeds the carrying value of the asset,then the asset is not impaired. 
D) If the sum of the discounted cash flows exceeds the carrying value of the asset,then the asset is not impaired.

Question 3

Annual impairment tests for goodwill of all applicable business units must be for approximately the same measurement date.

Accepted Answer

A) True 
 B)False

Question 4

Explain how gains or losses on impaired assets should be reported in income.

Accepted Answer

Gains on impaired assets would never be

Question 5

One example of an impairment indicator is a significant adverse change in legal factors that affect the value of an asset or asset group.

Accepted Answer

A) True 
 B)False

Question 6

In 2010,Bambung Corporation acquired production machinery at a cost of £410,000,which now has a book value of £190,000.The undiscounted cash flows from use of the machinery is £175,000.and it's fair value in use is £155,000.What amount should Bambung recognize as a loss on impairment?

Accepted Answer

A) £35,000 
B) £20,000 
C) £15,000 
D) -0- 
A) £35,000 
B) £20,000 
C) £15,000 
D) -0-

Question 7

An impairment occurs when an asset's carrying value falls below its total future cash-generating ability.

Accepted Answer

A) True 
 B)False

Question 8

In 2010,TallyHo Farms acquired production machinery at a cost of £410,000.In 2013 when accumulated depreciation was £160,000,Banbung reported an impairment loss of £75,000.Now,in 2017 the machinery has a book value of £140,000.The recoverable amount of the machinery is £235,000.and its value in use is £210,000.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?

Accepted Answer

A) £95,000 
B) £75,000 
C) £40,000 
D) £25,000 
A) £95,000 
B) £75,000 
C) £40,000 
D) £25,000

Question 9

IFRS associates goodwill with a cash-generating unit.

Accepted Answer

A) True 
 B)False

Question 10

In early 2015,Plattsville Plastics recently decided to dispose of an extrusion machine.The original cost was $460,000 and accumulated depreciation was $310,000.At that time,the machine was retired from operations,the book value of the machine approximated its fair value.On December 31,2016,the fair value of the machine was determined to be $110,000.On December 31,2017,the fair value of the machine was determined to be $160,000.Which of the following would be included in a related adjusting entry on December 31,2017?

Accepted Answer

A) credit Gain on Machine Held for Disposal for $160,000 
B) credit Gain on Machine Held for Disposal for $50,000 
C) credit Gain on Machine Held for Disposal for $40,000 
D) No adjusting entry is required. 
A) credit Gain on Machine Held for Disposal for $160,000 
B) credit Gain on Machine Held for Disposal for $50,000 
C) credit Gain on Machine Held for Disposal for $40,000 
D) No adjusting entry is required.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Before testing property,plant,and equipment (PPE)and finite-life intangible (FLI)assets,________.

Accepted Answer

A) the firm will assess PPE as individual assets and FLI assets in asset groups 
B) the firm will assess PPE in asset groups and FLI assets as individual assets 
C) the firm will assess both PPE and FLI assets in asset groups 
D) the firm will assess both PPE and FLI assets as individual assets or in asset groups 
A) the firm will assess PPE as individual assets and FLI assets in asset groups 
B) the firm will assess PPE in asset groups and FLI assets as individual assets 
C) the firm will assess both PPE and FLI assets in asset groups 
D) the firm will assess both PPE and FLI assets as individual assets or in asset groups

Question 13

U.S.GAAP does not permit subsequent reversals of impairment losses for finite-life intangible assets.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

Firms conduct an impairment test for fin

Question 15

Regular Corp.has four divisions.One of them,Yulon Products,was acquired on January 1,2016,for $80,000,000,and recorded goodwill of $9,000,000 as a result of that purchase.At December 31,2017,Yulon Products had a fair value (including goodwill)of $66,000,000.The book value of the company's net assets (without goodwill)at December 31,2017 was $77,000,000.For 2017,Regular reported a loss on impairment of goodwill of $7,000,000.What was the fair value of the company's net assets (without goodwill)at December 31,2017?

Accepted Answer

A) $73,000,000 
B) $68,000,000 
C) $64,000,000 
D) $59,000,000 
A) $73,000,000 
B) $68,000,000 
C) $64,000,000 
D) $59,000,000

Question 16

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 ________.

Accepted Answer

A) the machinery accumulated depreciation account 
B) the loss on impairment account 
C) the machinery account 
D) the machinery depreciation expense account 
A) the machinery accumulated depreciation account 
B) the loss on impairment account 
C) the machinery account 
D) the machinery depreciation expense account

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Stanvid Company provided the following information:
   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.

Accepted Answer

Because it is more likely than not that

Question 19

Firms assess assets for impairment ________.

Accepted Answer

A) as individual assets only 
B) in asset groups only 
C) as either individual assets or in asset groups 
D) as both individual assets and in asset groups 
A) as individual assets only 
B) in asset groups only 
C) as either individual assets or in asset groups 
D) as both individual assets and in asset groups

Question 20

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

Accepted Answer

A) If the carrying value of the asset is greater than its recoverable value,an impairment loss must be recognized. 
B) The asset recoverability test compares the carrying value of the asset with its fair value. 
C) The carrying value of the asset after adjustment for impairment loss is its fair value. 
D) If impairment indicators are present,the company must conduct an impairment test. 
A) If the carrying value of the asset is greater than its recoverable value,an impairment loss must be recognized. 
B) The asset recoverability test compares the carrying value of the asset with its fair value. 
C) The carrying value of the asset after adjustment for impairment loss is its fair value. 
D) If impairment indicators are present,the company must conduct an impairment test.

Which of the following is an impairment indicator?

Which of the following statements is true about assessing recoverability of an asset?

Annual impairment tests for goodwill of all applicable business units must be for approximately the same measurement date.

Explain how gains or losses on impaired assets should be reported in income.

One example of an impairment indicator is a significant adverse change in legal factors that affect the value of an asset or asset group.

In 2010,Bambung Corporation acquired production machinery at a cost of £410,000,which now has a book value of £190,000.The undiscounted cash flows from use of the machinery is £175,000.and it's fair value in use is £155,000.What amount should Bambung recognize as a loss on impairment?

An impairment occurs when an asset's carrying value falls below its total future cash-generating ability.

IFRS associates goodwill with a cash-generating unit.

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

Before testing property,plant,and equipment (PPE)and finite-life intangible (FLI)assets,________.

U.S.GAAP does not permit subsequent reversals of impairment losses for finite-life intangible assets.

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

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 ________.

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

Stanvid Company provided the following information: 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.

Firms assess assets for impairment ________.

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

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters

Exam 13: Long-Term Operating Assets: Departures From Historical Cost

Which of the following is an impairment indicator?

Which of the following statements is true about assessing recoverability of an asset?

Annual impairment tests for goodwill of all applicable business units must be for approximately the same measurement date.

Explain how gains or losses on impaired assets should be reported in income.

One example of an impairment indicator is a significant adverse change in legal factors that affect the value of an asset or asset group.

In 2010,Bambung Corporation acquired production machinery at a cost of £410,000,which now has a book value of £190,000.The undiscounted cash flows from use of the machinery is £175,000.and it's fair value in use is £155,000.What amount should Bambung recognize as a loss on impairment?

An impairment occurs when an asset's carrying value falls below its total future cash-generating ability.

IFRS associates goodwill with a cash-generating unit.

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

Before testing property,plant,and equipment (PPE)and finite-life intangible (FLI)assets,________.

U.S.GAAP does not permit subsequent reversals of impairment losses for finite-life intangible assets.

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

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 ________.

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

Stanvid Company provided the following information: 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.

Firms assess assets for impairment ________.

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

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters