300879 IMPAIRMENT Flashcards
Impaired long-lived assets to be disposed of by sale that are subject to the reporting requirements of FASB ASC 360-10-35 are measured at:
lower of the fair value less costs to sell or carrying amount.
historical cost.
fair value.
carrying amount.
lower of the fair value less costs to sell or carrying amount.
Lower of fair value, less costs to sell or carrying amount, is the proper measurement of an impaired asset held for sale.
FASB ASC 360-10-35-43
FASB ASC 360-10-35-43
Carrying Amount (Book Value)
The carrying amount or book value is the net amount at which an item is reported in the financial statements of the enterprise. For a receivable, the FASB ASC Glossary indicates the carrying amount is the “face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issues costs and also an allowance for uncollectible amounts and other valuation accounts.”
For a payable, the FASB ASC Glossary indicates the carrying amount is the “face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issue costs.”
Fair Value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date.
Historical Cost
Historical cost is one of the attributes used to measure assets and liabilities. It is the amount of cash, or its equivalent, paid to acquire the asset (or received to incur the liability). Historical cost is used for property, plant, and equipment, and most inventories. It is also called the “historical exchange rate” or “transaction-based.”
Impairment
Impairment is the condition that exists when the amount of a long-lived asset (asset group) carried on an organization’s books exceeds its fair value. An impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment is based on the carrying amount of the asset (asset group) at the date it is tested for recoverability, whether in use or under development. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value.
FASB ASC 360-10-35-15; GASB 1100.107
2241.36
A long-lived asset classified as held for sale must be measured at the lower of its carrying amount or fair value less cost to sell. Cost to sell includes the incremental direct costs to transact a sale. Such costs do not include expected future losses associated with the operations of the long-lived asset while it is classified as held for sale.
FASB ASC 360-10-35
