Question 1

U.S.GAAP requires an impairment test for goodwill if ________.

Accepted Answer

A) the fair value of the reporting unit (including goodwill)is greater than the fair value of its net assets (without goodwill) 
B) the fair value of the reporting unit (including goodwill)is less than the fair value of its net assets (without goodwill) 
C) the fair value of the reporting unit (including goodwill)is less than the book value of the reporting unit (without goodwill) 
D) the fair value of the reporting unit (including goodwill)is less than the book value of the reporting unit (including goodwill) 
A) the fair value of the reporting unit (including goodwill)is greater than the fair value of its net assets (without goodwill) 
B) the fair value of the reporting unit (including goodwill)is less than the fair value of its net assets (without goodwill) 
C) the fair value of the reporting unit (including goodwill)is less than the book value of the reporting unit (without goodwill) 
D) the fair value of the reporting unit (including goodwill)is less than the book value of the reporting unit (including goodwill)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Under IFRS,impairment tests are more frequent for PPE and finite-life intangible assets than for indefinite-life intangible assets.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

A firm recognizing an impairment loss must separately disclose the amount of loss in the income statement.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a part of the impairment test of a significant asset?

Accepted Answer

A) determine the asset's carrying value 
B) determine the asset's fair value less costs to dispose 
C) determine the fair value of the cash-generating unit without the asset 
D) determine the discounted value of the future cash flows expected to be derived from the asset 
A) determine the asset's carrying value 
B) determine the asset's fair value less costs to dispose 
C) determine the fair value of the cash-generating unit without the asset 
D) determine the discounted value of the future cash flows expected to be derived from the asset

Question 8

IFRS requires an impairment test for goodwill at least annually.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

When assessing asset impairment,fair value is also referred to as replacement cost.

Accepted Answer

A) True 
 B)False

Question 11

IFRS requires determination of an impairment loss for goodwill ________.

Accepted Answer

A) when the fair value of the cash-generating unit (including goodwill)is greater than the book value of its net assets (including goodwill) 
B) when the book value of the cash-generating unit is greater than its recoverable value 
C) annually 
D) whenever there are significant impairment indicators 
A) when the fair value of the cash-generating unit (including goodwill)is greater than the book value of its net assets (including goodwill) 
B) when the book value of the cash-generating unit is greater than its recoverable value 
C) annually 
D) whenever there are significant impairment indicators

Question 12

Under IFRS,the recoverable value of an asset is ________.

Accepted Answer

A) the greater of the asset's estimated replacement value and its value in use 
B) the greater of the asset's estimated net fair value and its value in use 
C) the lesser of the asset's estimated replacement value and its value in use 
D) the lesser of the asset's estimated net fair value and its value in use 
A) the greater of the asset's estimated replacement value and its value in use 
B) the greater of the asset's estimated net fair value and its value in use 
C) the lesser of the asset's estimated replacement value and its value in use 
D) the lesser of the asset's estimated net fair value and its value in use

Question 13

Asset grouping is similar under U.S.GAAP and IFRS.

Accepted Answer

A) True 
 B)False

Question 14

Under the IFRS one-step impairment test,an assets recoverable value is its fair value or its value in use,whichever is lower.

Accepted Answer

A) True 
 B)False

Question 15

Impairment testing for goodwill is the same as impairment tests for other indefinite-life assets.

Accepted Answer

A) True 
 B)False

Question 16

List four impairment indicators.

Accepted Answer

Any four of the following:• A significan

Question 17

Which of the following is not 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 current-period cash flow loss combined with a forecast of continuing losses associated with the use of an asset or asset group 
D) a significant decrease 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 current-period cash flow loss combined with a forecast of continuing losses associated with the use of an asset or asset group 
D) a significant decrease in the market price of an asset or asset group

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

In 2011,Diller Company acquired production machinery at a cost of $860,000,which now has a book value of $380,000.The undiscounted cash flows from use of the machinery is $335,000.and it's fair value is $290,000.
a.Determine if an impairment loss has occurred.Explain.
b.If an impairment loss has occurred,provide the journal entry to record the impairment loss.

Accepted Answer

a.
 The undiscounted cash flows of $335,

Question 20

Long-term asset that is retired from operations and held for disposal or sale are valued at ________.

Accepted Answer

A) lower of carrying value or net realizable value 
B) lower of cost or market 
C) value in use 
D) replacement cost 
A) lower of carrying value or net realizable value 
B) lower of cost or market 
C) value in use 
D) replacement cost

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

U.S.GAAP requires an impairment test for goodwill if ________.

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

Under IFRS,impairment tests are more frequent for PPE and finite-life intangible assets than for indefinite-life intangible assets.

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

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

A firm recognizing an impairment loss must separately disclose the amount of loss in the income statement.

Which of the following is not a part of the impairment test of a significant asset?

IFRS requires an impairment test for goodwill at least annually.

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

When assessing asset impairment,fair value is also referred to as replacement cost.

IFRS requires determination of an impairment loss for goodwill ________.

Under IFRS,the recoverable value of an asset is ________.

Asset grouping is similar under U.S.GAAP and IFRS.

Under the IFRS one-step impairment test,an assets recoverable value is its fair value or its value in use,whichever is lower.

Impairment testing for goodwill is the same as impairment tests for other indefinite-life assets.

List four impairment indicators.

Which of the following is not an impairment indicator?

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

Long-term asset that is retired from operations and held for disposal or sale are valued at ________.

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

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