In accordance with HKAS 36 ‘Impairment of Assets’ which of the following statements are true? (1) Intangible assets with indefinite useful life must be checked annually for evidence of impairment (2) An impairment loss must be recognized immediately in the statement of profit or loss, except that all or part of a loss on a previously revalued asset should be charged against any related revaluation surplus (3) If the fair value less costs to disposal exceeds the carrying amount of an asset there is no need to estimate value in use A. 1, 2 and 3 B. 1 and 3 C. 2 and 3 D. 1 and 2

In accordance with HKAS 36 ‘Impairment of Assets’ which of the following statements are true? (1) Intangible assets with indefinite useful life must be checked annually for evidence of impairment (2) An impairment loss must be recognized immediately in the statement of profit or loss, except that all or part of a loss on a previously revalued asset should be charged against any related revaluation surplus (3) If the fair value less costs to disposal exceeds the carrying amount of an asset there is no need to estimate value in use A. 1, 2 and 3 B. 1 and 3 C. 2 and 3 D. 1 and 2

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 6QE

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In accordance with IAS 36 Impairment of Assets, which of the following statements are true? Non-current assets must be checked annually for indications of impairment An impairment loss must be recognized immediately in the income statement, except that all or part of a loss on a previously revalued asset should be charged against any related revaluation surplus If the fair value less costs to sell exceeds the carrying amount of an asset, there is no need to estimate value in use A (1) and (2) B (1) and (3) C (2) and (3) D (1), (2) and (3)
In accordance with IAS 36 Impairment of Assets, which of the following statements is correct? 1) Investment properties carried at fair value must be treated annually for impairment. 2) Goodwill must be tested for impairment only when there is an indicator of impairment. 3) Intangible assets with indefinite useful lives must be tested annually for impairment. 4) Intangible assets with definite useful lives must be tested annually for impairment.
According to PAS 36 Impairment of Assets, the recoverable amount of an asset is determined only if there are indications that the asset is impaired. is determined at least annually. need not be determined if there are no indications for impairment, except for intangible assets with indefinite useful life, intangible assets not yet available for use, and goodwill acquired in a business combination which are required to be tested for impairment at least annually. is determined only if there are indications that the asset is impaired and need not be determined if there are no indications for impairment, except for intangible assets with indefinite useful life, intangible assets not yet available for use, and goodwill acquired in a business combination which are required to be tested for impairment at least annually.
According to IAS 16 Property, Plant and Equipment, which, if any, of the following statements about depreciation are correct? The main purpose of depreciation is to reflect the fall in value of an asset over its useful life When an asset is revalued, subsequent depreciation relating to the amount of the revaluation should be debited to the revaluation surplus rather than to the income statement The provision for depreciation ensures that there are funds available to replace an asset when this becomes necessary, though in times of inflation, additional amounts may need to be set aside A change in depreciation method constitutes a change in accounting policy and must be accounted for as such
According to IAS 16 Property, Plant and Equipment, which, if any, of the following statements about depreciation are correct? The main purpose of depreciation is to reflect the fall in value of an asset over its useful life When an asset is revalued, subsequent depreciation relating to the amount of the revaluation should be debited to the revaluation surplus rather than to the income statement The provision for depreciation ensures that there are funds available to replace an asset when this becomes necessary, though in times of inflation, additional amounts may need to be set aside A change in depreciation method constitutes a change in accounting policy and must be accounted for as such A (1) and (4) B (2) and (3) C (4) only D None of the statements is correct
Under IAS 36 Impairment of Assets, impairment test for an individual asset requires that the carrying amount of the asset be compared to its recoverable amount. According to IAS 36, ‘recoverable amount’ is defined as the higher of two items. Which one of the following correctly describes these two items? a. present value of future cash flows from the asset and fair value of asset less costs of disposal b. future cash flows from the asset and fair value of asset less costs of disposal c. future cash flows from the asset and fair value of asset d. present value of future cash flows from the asset and fair value of the asset
When the carrying amount of an asset exceeds its recoverable amount, the asset is impaired. the excess represents impairment loss. there is a need to write-down the asset’s carrying amount to its recoverable amount. d. all of these 2. According to PAS 36 Impairment of Assets, the recoverable amount of an asset a. is determined only if there are indications that the asset is impaired. b. is determined at least annually. c. need not be determined if there are no indications for impairment, except for intangible assets with indefinite useful life, intangible assets not yet available for use, and goodwill acquired in a business combination which are required to be tested for impairment at least annually. d. is determined only if there are indications that the asset is impaired and need not be determined if there are no indications for impairment, except for intangible assets with indefinite useful life, intangible assets not yet available for use, and goodwill acquired in a business…
All of the following are true regarding recovery of impairments for intangible assets except a. After a recovery of impairment has been recognized, the carrying value of the asset reported on the statement of financial position will be the higher of the fair value less cost to sell or the value-in-use. O b. A recovery of impairment will be reported in the "Other income and expense" section of the income statement. C. The amount of the recovery is limited to the carrying value of the asset that would have been reported had no impairment occurred. O d. No recovery of impairment is allowed for goodwill.
The main objective of IAS 36 Impairment of Assets is to prescribe the procedures that should ensure that an entity's assets are included in its statement of financial position at no more than their recoverable amounts. Where an asset is carried at an amount in excess of its recoverable amount, it is said to be impaired and IAS 36 requires an impairment loss to be recognized. Required: Define an impairment loss explaining the relevance of fair value less costs to sell and value in use and state how frequently assets should be tested for impairment. 2. Describe the possible incators of impairment. 3. Explain how an impairment loss is accounted for after it has been calculated.
Ma1. d) In accordance with IAS 36: Impairment of Assets, an entity shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any of such indications exist, the entity shall estimate the recoverable amount of the asset. However, some assets would require mandatory testing for impairment. Required: Outline assets that require mandatory testing for impairment in accordance with IAS 36: Impairment of Assets.
When an impairment loss occurs, the carrying amount of the asset should be reduced to its a) © Recoverable amount b) Market value c) © Value in use d) • Net present value
All of the following are true regarding the revaluation model allowed under GAAP except; Select one: a. Once selected, the revaluation policy applies to an entire class of property, plant and equipment. b. When an asset is revalued, any increase in carrying amount is reported as miscellaneous revenue. c. After initial recognition, the revalued amount is fair value less subsequent depreciation and impairment losses. d. Revaluations must be made regularly to ensure that the carrying value is not materially different from fair value.