Exam 13: Impairment of Assets

Gairdner Limited recognised an impairment loss of $50 000 against a cash-generating unit consisting of the following assets: buildings $500 000; roads $300 000; and equipment $600 000.The net carrying amount of the roads after allocation of the impairment loss is:

The impairment test for goodwill must be conducted:

Higher cash outflows and/or lower cash inflows expected from an asset are examples of internal sources of information that may indicate that an asset is impaired.

Deferred tax assets are subject to annual impairment tests.

When calculating value in use,cash flow projections should cover a maximum period of three years.

At reporting date,the carrying amount of a cash-generating unit was considered to be have been impaired by $1000.The unit included the following assets: land $5000; plant $4000; and goodwill $1250.The carrying amount of goodwill after the allocation of the impairment loss is:

An impairment test is conducted only:

Which of the following assets is incorrect?

When assessing the value in use of equipment the following estimates of cash flows and risk rates were made.In one year: $1000 at 4%; in 2 years $1000 at 4.5%,and in 3 years $1000 at 5%.The expected present value of the asset is:

Which of the following is an internal source of information that may be used to indicate if an asset is impaired?

Holly Limited estimated that it would receive future cash flows from the use of its equipment as follows. $\triangleright$ End of year 1 $25 000. $\triangleright$ End of year 2 $40 000. $\triangleright$ End of year 3 $15 000. The discount rate was determined as 5%.The 'value in use' of the equipment is:

When calculating value in use,cash inflows relating to financing activities and income tax must be excluded from the calculation.

Under AASB 136 Impairment of Assets,which of the following assets are subject to impairment testing?

A decrease in interest rates is an example of an external source of information that may indicate that an asset is impaired.

AASB 136 Impairment of Assets prohibits the reversals of impairment losses relating to goodwill.

Where the fair value less costs of disposal exceeds the carrying amount,it is necessary to calculate the value in use of the asset to determine whether it is impaired.

Value in use is:

Corporate assets are tested separately for impairment from other assets within an entity.

If the recoverable amount of a cash-generating unit exceeds its carrying amount:

If some or all of the output of a group of assets is used internally,the assets may still constitute a cash generating unit.