Asset Impairment - CPA Financial Accounting and Reporting (FAR)
Card 1 of 24
A company has a tangible manufacturing asset and is trying to determine whether the asset needs to be evaluated for impairment. Which of the following would not indicate a need to perform this test?
A company has a tangible manufacturing asset and is trying to determine whether the asset needs to be evaluated for impairment. Which of the following would not indicate a need to perform this test?
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Operational losses do not indicate that the fair value of the asset is less than the asset's carrying value. The other choices indicate that the asset's fair value could be less than it's carrying value.
Operational losses do not indicate that the fair value of the asset is less than the asset's carrying value. The other choices indicate that the asset's fair value could be less than it's carrying value.
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Which of the following is correct, under US GAAP, regarding impairment losses?
Which of the following is correct, under US GAAP, regarding impairment losses?
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Impairment losses on discontinued operations are presented after-tax; Impairment losses are recorded when the fair value of an asset falls below its carrying value, not the other way around.
Impairment losses on discontinued operations are presented after-tax; Impairment losses are recorded when the fair value of an asset falls below its carrying value, not the other way around.
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The Mallory Corp has a fixed asset with a carrying value of $100,000, expected future cash flows of $90,000, present value of expected future cash flows of $70,000, and a market value of $75,000. What amount of impairment loss should Mallory record for this asset?
The Mallory Corp has a fixed asset with a carrying value of $100,000, expected future cash flows of $90,000, present value of expected future cash flows of $70,000, and a market value of $75,000. What amount of impairment loss should Mallory record for this asset?
Tap to reveal answer
Because expected future cash flows of $90K are lower than the asset's carrying value of $100K, impairment should be recorded. The amount of impairment loss recorded will be equal to the carrying value of $100K - the asset's fair value of $75K.
Because expected future cash flows of $90K are lower than the asset's carrying value of $100K, impairment should be recorded. The amount of impairment loss recorded will be equal to the carrying value of $100K - the asset's fair value of $75K.
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After an impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis. Which of the following statements about subsequent reversal of a previously recognized impairment loss is correct under US GAAP?
After an impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis. Which of the following statements about subsequent reversal of a previously recognized impairment loss is correct under US GAAP?
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Under US GAAP, subsequent reversal of intangible asset impairment losses is prohibited unless the intangible asset is held for sale.
Under US GAAP, subsequent reversal of intangible asset impairment losses is prohibited unless the intangible asset is held for sale.
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Of the following, which is a pair of value that are compared to determined the amount of a possible impairment loss on an intangible asset, with an indefinite life, other than goodwill?
Of the following, which is a pair of value that are compared to determined the amount of a possible impairment loss on an intangible asset, with an indefinite life, other than goodwill?
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An intangible asset with an indefinite life is tested for impairment by comparing the fair value of the intangible asset to its carrying amount.
An intangible asset with an indefinite life is tested for impairment by comparing the fair value of the intangible asset to its carrying amount.
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Under US GAAP, long term fixed assets that are impaired can only have their carrying value reinstated if they are:
Under US GAAP, long term fixed assets that are impaired can only have their carrying value reinstated if they are:
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Only when these assets are held for disposal can they have their carrying values restored.
Only when these assets are held for disposal can they have their carrying values restored.
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Of the following, which is a pair of value that are compared to determined the amount of a possible impairment loss on an intangible asset, with an indefinite life, other than goodwill?
Of the following, which is a pair of value that are compared to determined the amount of a possible impairment loss on an intangible asset, with an indefinite life, other than goodwill?
Tap to reveal answer
An intangible asset with an indefinite life is tested for impairment by comparing the fair value of the intangible asset to its carrying amount.
An intangible asset with an indefinite life is tested for impairment by comparing the fair value of the intangible asset to its carrying amount.
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Under US GAAP, long term fixed assets that are impaired can only have their carrying value reinstated if they are:
Under US GAAP, long term fixed assets that are impaired can only have their carrying value reinstated if they are:
Tap to reveal answer
Only when these assets are held for disposal can they have their carrying values restored.
Only when these assets are held for disposal can they have their carrying values restored.
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The Mallory Corp has a fixed asset with a carrying value of $100,000, expected future cash flows of $90,000, present value of expected future cash flows of $70,000, and a market value of $75,000. What amount of impairment loss should Mallory record for this asset?
The Mallory Corp has a fixed asset with a carrying value of $100,000, expected future cash flows of $90,000, present value of expected future cash flows of $70,000, and a market value of $75,000. What amount of impairment loss should Mallory record for this asset?
Tap to reveal answer
Because expected future cash flows of $90K are lower than the asset's carrying value of $100K, impairment should be recorded. The amount of impairment loss recorded will be equal to the carrying value of $100K - the asset's fair value of $75K.
Because expected future cash flows of $90K are lower than the asset's carrying value of $100K, impairment should be recorded. The amount of impairment loss recorded will be equal to the carrying value of $100K - the asset's fair value of $75K.
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After an impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis. Which of the following statements about subsequent reversal of a previously recognized impairment loss is correct under US GAAP?
After an impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis. Which of the following statements about subsequent reversal of a previously recognized impairment loss is correct under US GAAP?
Tap to reveal answer
Under US GAAP, subsequent reversal of intangible asset impairment losses is prohibited unless the intangible asset is held for sale.
Under US GAAP, subsequent reversal of intangible asset impairment losses is prohibited unless the intangible asset is held for sale.
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A company has a tangible manufacturing asset and is trying to determine whether the asset needs to be evaluated for impairment. Which of the following would not indicate a need to perform this test?
A company has a tangible manufacturing asset and is trying to determine whether the asset needs to be evaluated for impairment. Which of the following would not indicate a need to perform this test?
Tap to reveal answer
Operational losses do not indicate that the fair value of the asset is less than the asset's carrying value. The other choices indicate that the asset's fair value could be less than it's carrying value.
Operational losses do not indicate that the fair value of the asset is less than the asset's carrying value. The other choices indicate that the asset's fair value could be less than it's carrying value.
← Didn't Know|Knew It →
Which of the following is correct, under US GAAP, regarding impairment losses?
Which of the following is correct, under US GAAP, regarding impairment losses?
Tap to reveal answer
Impairment losses on discontinued operations are presented after-tax; Impairment losses are recorded when the fair value of an asset falls below its carrying value, not the other way around.
Impairment losses on discontinued operations are presented after-tax; Impairment losses are recorded when the fair value of an asset falls below its carrying value, not the other way around.
← Didn't Know|Knew It →
A company has a tangible manufacturing asset and is trying to determine whether the asset needs to be evaluated for impairment. Which of the following would not indicate a need to perform this test?
A company has a tangible manufacturing asset and is trying to determine whether the asset needs to be evaluated for impairment. Which of the following would not indicate a need to perform this test?
Tap to reveal answer
Operational losses do not indicate that the fair value of the asset is less than the asset's carrying value. The other choices indicate that the asset's fair value could be less than it's carrying value.
Operational losses do not indicate that the fair value of the asset is less than the asset's carrying value. The other choices indicate that the asset's fair value could be less than it's carrying value.
← Didn't Know|Knew It →
Which of the following is correct, under US GAAP, regarding impairment losses?
Which of the following is correct, under US GAAP, regarding impairment losses?
Tap to reveal answer
Impairment losses on discontinued operations are presented after-tax; Impairment losses are recorded when the fair value of an asset falls below its carrying value, not the other way around.
Impairment losses on discontinued operations are presented after-tax; Impairment losses are recorded when the fair value of an asset falls below its carrying value, not the other way around.
← Didn't Know|Knew It →
The Mallory Corp has a fixed asset with a carrying value of $100,000, expected future cash flows of $90,000, present value of expected future cash flows of $70,000, and a market value of $75,000. What amount of impairment loss should Mallory record for this asset?
The Mallory Corp has a fixed asset with a carrying value of $100,000, expected future cash flows of $90,000, present value of expected future cash flows of $70,000, and a market value of $75,000. What amount of impairment loss should Mallory record for this asset?
Tap to reveal answer
Because expected future cash flows of $90K are lower than the asset's carrying value of $100K, impairment should be recorded. The amount of impairment loss recorded will be equal to the carrying value of $100K - the asset's fair value of $75K.
Because expected future cash flows of $90K are lower than the asset's carrying value of $100K, impairment should be recorded. The amount of impairment loss recorded will be equal to the carrying value of $100K - the asset's fair value of $75K.
← Didn't Know|Knew It →
After an impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis. Which of the following statements about subsequent reversal of a previously recognized impairment loss is correct under US GAAP?
After an impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis. Which of the following statements about subsequent reversal of a previously recognized impairment loss is correct under US GAAP?
Tap to reveal answer
Under US GAAP, subsequent reversal of intangible asset impairment losses is prohibited unless the intangible asset is held for sale.
Under US GAAP, subsequent reversal of intangible asset impairment losses is prohibited unless the intangible asset is held for sale.
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Of the following, which is a pair of value that are compared to determined the amount of a possible impairment loss on an intangible asset, with an indefinite life, other than goodwill?
Of the following, which is a pair of value that are compared to determined the amount of a possible impairment loss on an intangible asset, with an indefinite life, other than goodwill?
Tap to reveal answer
An intangible asset with an indefinite life is tested for impairment by comparing the fair value of the intangible asset to its carrying amount.
An intangible asset with an indefinite life is tested for impairment by comparing the fair value of the intangible asset to its carrying amount.
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Under US GAAP, long term fixed assets that are impaired can only have their carrying value reinstated if they are:
Under US GAAP, long term fixed assets that are impaired can only have their carrying value reinstated if they are:
Tap to reveal answer
Only when these assets are held for disposal can they have their carrying values restored.
Only when these assets are held for disposal can they have their carrying values restored.
← Didn't Know|Knew It →
The Mallory Corp has a fixed asset with a carrying value of $100,000, expected future cash flows of $90,000, present value of expected future cash flows of $70,000, and a market value of $75,000. What amount of impairment loss should Mallory record for this asset?
The Mallory Corp has a fixed asset with a carrying value of $100,000, expected future cash flows of $90,000, present value of expected future cash flows of $70,000, and a market value of $75,000. What amount of impairment loss should Mallory record for this asset?
Tap to reveal answer
Because expected future cash flows of $90K are lower than the asset's carrying value of $100K, impairment should be recorded. The amount of impairment loss recorded will be equal to the carrying value of $100K - the asset's fair value of $75K.
Because expected future cash flows of $90K are lower than the asset's carrying value of $100K, impairment should be recorded. The amount of impairment loss recorded will be equal to the carrying value of $100K - the asset's fair value of $75K.
← Didn't Know|Knew It →
A company has a tangible manufacturing asset and is trying to determine whether the asset needs to be evaluated for impairment. Which of the following would not indicate a need to perform this test?
A company has a tangible manufacturing asset and is trying to determine whether the asset needs to be evaluated for impairment. Which of the following would not indicate a need to perform this test?
Tap to reveal answer
Operational losses do not indicate that the fair value of the asset is less than the asset's carrying value. The other choices indicate that the asset's fair value could be less than it's carrying value.
Operational losses do not indicate that the fair value of the asset is less than the asset's carrying value. The other choices indicate that the asset's fair value could be less than it's carrying value.
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