Question 1

Which of the following disclosure requirement applies to IFRS but not to U.S.GAAP?

Accepted Answer

A) The events and circumstances that led to the recognition of the impairment. 
B) Whether the recoverable amount was fair value less costs to sell or value in use. 
C) The amount of any impairment loss if not separately disclosed in the income statement. 
D) The asset that was impaired. 
A) The events and circumstances that led to the recognition of the impairment. 
B) Whether the recoverable amount was fair value less costs to sell or value in use. 
C) The amount of any impairment loss if not separately disclosed in the income statement. 
D) The asset that was impaired.

Question 2

Deluxe Corp.has four international divisions.One of them,Qaram Corp.,was acquired on January 1,2016,for ₨600,000,000,and recorded goodwill of ₨70,000,000 as a result of that purchase.At December 31,2016,Qaram had a book value (including goodwill)of ₨375,000,000.The total recoverable amount of Qaram was ₨355,000,000.What amount of loss on impairment of goodwill should Deluxe record in 2016?

Accepted Answer

A) $45,000,000 
B) $25,000,000 
C) $20,000,000 
D) -0- 
A) $45,000,000 
B) $25,000,000 
C) $20,000,000 
D) -0-

Question 3

Value in use of a long-life asset is ________.

Accepted Answer

A) the greater of its recoverable value or its fair value less cost to sell 
B) the lesser of its recoverable value or its fair value less cost to sell 
C) the undiscounted cash flows from use of the asset 
D) the discounted cash flows from use of the asset 
A) the greater of its recoverable value or its fair value less cost to sell 
B) the lesser of its recoverable value or its fair value less cost to sell 
C) the undiscounted cash flows from use of the asset 
D) the discounted cash flows from use of the asset

Question 4

If the company writes down the asset in one period and still holds the asset in the next period,then the company cannot report an increase in value in the subsequent period.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) the value in use of the cash-generating unit is less than its fair value less cost to sell 
B) the value in use of the cash-generating unit is greater than its fair value less cost to sell 
C) the recoverable amount of the cash-generating unit less than the carrying value of the cash-generating unit 
D) the recoverable amount of the cash-generating unit is greater than the carrying value of the cash-generating unit 
A) the value in use of the cash-generating unit is less than its fair value less cost to sell 
B) the value in use of the cash-generating unit is greater than its fair value less cost to sell 
C) the recoverable amount of the cash-generating unit less than the carrying value of the cash-generating unit 
D) the recoverable amount of the cash-generating unit is greater than the carrying value of the cash-generating unit

Question 6

Devo Co.has an indefinite-life intangible asset with a carrying value of $782,000.The undiscounted cash flows expected to be realized from that asset total $827,000; the discounted cash flows are $574,000; and the fair value of the asset has been determined to be $646,000.What is the amount of the impairment loss to be recorded,if any?

Accepted Answer

A) $208,000 
B) $136,000 
C) $35,000 
D) -0- 
A) $208,000 
B) $136,000 
C) $35,000 
D) -0-

Question 7

After an impairment loss is recorded for goodwill,what is the basis for the impaired asset?

Accepted Answer

A) the recoverable amount 
B) the fair value 
C) undiscounted expected cash flows 
D) discounted expected cash flows 
A) the recoverable amount 
B) the fair value 
C) undiscounted expected cash flows 
D) discounted expected cash flows

Question 8

Firms associate goodwill with the group of net assets at the level of the operating segment or one level below the operating segment.

Accepted Answer

A) True 
 B)False

Question 9

In 2009,Cilla Company acquired production machinery at a cost of $410,000,which now has a accumulated depreciation of $240,000.The undiscounted cash flows from use of the machinery is $190,000 and it's fair value is $145,000.What amount should Cilla recognize as a loss on impairment?

Accepted Answer

A) $20,000 
B) $35,000 
C) $70,000 
D) -0- 
A) $20,000 
B) $35,000 
C) $70,000 
D) -0-

Question 10

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

Accepted Answer

A) amortization 
B) derecognition 
C) recoverability 
D) impairment 
A) amortization 
B) derecognition 
C) recoverability 
D) impairment

Question 11

In 2011,ZeeTee Inc.acquired production machinery at a cost of $630,000,which now has a accumulated depreciation of $380,000.The undiscounted cash flows from use of the machinery is $220,000.and it's fair value is $195,000.What amount should Condor recognize as a loss on impairment?

Accepted Answer

A) $185,000 
B) $55,000 
C) $25,000 
D) -0- 
A) $185,000 
B) $55,000 
C) $25,000 
D) -0-

Question 12

In 2017,Mao Li Corporation determined that a production machine used in its operations was impaired and an impairment loss of HK$110,000 was recognized.In 2017,the fair value of the asset increased by HK$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?

Accepted Answer

A) IFRS permits the recognition of this impairment reversal as income from continuing operations. 
B) IFRS permits the recognition of this impairment reversal as other comprehensive income. 
C) IFRS allows the recognition of this impairment reversal as either income from continuing operations or as other comprehensive income,depending upon management's intent. 
D) IFRS does not permit recognition of gains on reversal of previous impairment loss write-downs. 
A) IFRS permits the recognition of this impairment reversal as income from continuing operations. 
B) IFRS permits the recognition of this impairment reversal as other comprehensive income. 
C) IFRS allows the recognition of this impairment reversal as either income from continuing operations or as other comprehensive income,depending upon management's intent. 
D) IFRS does not permit recognition of gains on reversal of previous impairment loss write-downs.

Question 13

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.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements about the recoverable amount used in the IFRS impairment test of a long-lived asset is false?

Accepted Answer

A) The recoverable amount may be calculated as the discounted value of expected future cash flows from the asset. 
B) If an asset's recoverable amount is higher than the carrying amount,no impairment loss will be reported. 
C) After recognizing impairment of an asset,the firm carries the asset at its recoverable amount. 
D) The recoverable amount is the lesser of the fair value of the asset less costs to sell or the asset's value in use. 
A) The recoverable amount may be calculated as the discounted value of expected future cash flows from the asset. 
B) If an asset's recoverable amount is higher than the carrying amount,no impairment loss will be reported. 
C) After recognizing impairment of an asset,the firm carries the asset at its recoverable amount. 
D) The recoverable amount is the lesser of the fair value of the asset less costs to sell or the asset's value in use.

Question 16

Which of the following statement regarding long-term operating assets classified as held for disposal is false?

Accepted Answer

A) Long-term operating assets classified as held for disposal are valued at net realizable value. 
B) Companies do not depreciate long-term operating assets classified as held for disposal. 
C) If the company writes down the asset in one period,the company can report an increase in value in the subsequent period up to,but not exceeding,the carrying value before the write-off. 
D) Companies must report individual long-term operating assets classified as held for disposal separately on the balance sheet. 
A) Long-term operating assets classified as held for disposal are valued at net realizable value. 
B) Companies do not depreciate long-term operating assets classified as held for disposal. 
C) If the company writes down the asset in one period,the company can report an increase in value in the subsequent period up to,but not exceeding,the carrying value before the write-off. 
D) Companies must report individual long-term operating assets classified as held for disposal separately on the balance sheet.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) the recoverable amount of the asset 
B) the fair value of the asset 
C) the value in use of the asset 
D) the lesser of the fair value of the asset and its value in use 
A) the recoverable amount of the asset 
B) the fair value of the asset 
C) the value in use of the asset 
D) the lesser of the fair value of the asset and its value in use

Question 19

When testing assets for impairment,a firm must assess them as individual assets.

Accepted Answer

A) True 
 B)False

Question 20

Briefly describe the process for determining impairment losses on property,plant,and equipment and finite-life intangible assets.

Accepted Answer

1.Evaluate whether impairment indicators

Which of the following disclosure requirement applies to IFRS but not to U.S.GAAP?

Value in use of a long-life asset is ________.

If the company writes down the asset in one period and still holds the asset in the next period,then the company cannot report an increase in value in the subsequent period.

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

After an impairment loss is recorded for goodwill,what is the basis for the impaired asset?

Firms associate goodwill with the group of net assets at the level of the operating segment or one level below the operating segment.

In 2009,Cilla Company acquired production machinery at a cost of $410,000,which now has a accumulated depreciation of $240,000.The undiscounted cash flows from use of the machinery is $190,000 and it's fair value is $145,000.What amount should Cilla recognize as a loss on impairment?

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

In 2011,ZeeTee Inc.acquired production machinery at a cost of $630,000,which now has a accumulated depreciation of $380,000.The undiscounted cash flows from use of the machinery is $220,000.and it's fair value is $195,000.What amount should Condor recognize as a loss on impairment?

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.

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

Which of the following statements about the recoverable amount used in the IFRS impairment test of a long-lived asset is false?

Which of the following statement regarding long-term operating assets classified as held for disposal is false?

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

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

When testing assets for impairment,a firm must assess them as individual assets.

Briefly describe the process for determining impairment losses on property,plant,and equipment and finite-life intangible assets.

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 disclosure requirement applies to IFRS but not to U.S.GAAP?

Value in use of a long-life asset is ________.

If the company writes down the asset in one period and still holds the asset in the next period,then the company cannot report an increase in value in the subsequent period.

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

After an impairment loss is recorded for goodwill,what is the basis for the impaired asset?

Firms associate goodwill with the group of net assets at the level of the operating segment or one level below the operating segment.

In 2009,Cilla Company acquired production machinery at a cost of $410,000,which now has a accumulated depreciation of $240,000.The undiscounted cash flows from use of the machinery is $190,000 and it's fair value is $145,000.What amount should Cilla recognize as a loss on impairment?

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

In 2011,ZeeTee Inc.acquired production machinery at a cost of $630,000,which now has a accumulated depreciation of $380,000.The undiscounted cash flows from use of the machinery is $220,000.and it's fair value is $195,000.What amount should Condor recognize as a loss on impairment?

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.

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

Which of the following statements about the recoverable amount used in the IFRS impairment test of a long-lived asset is false?

Which of the following statement regarding long-term operating assets classified as held for disposal is false?

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

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

When testing assets for impairment,a firm must assess them as individual assets.

Briefly describe the process for determining impairment losses on property,plant,and equipment and finite-life intangible assets.

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