#99 Impairment - Assets for Use & Assets held for sale

Question 1

Under U.S. GAAP, what is the recoverable cost/amount for assets in use?

Answer 1

Recoverable cost = Undiscounted cash flows

Question 2

Regarding assets in use, how do you test for impairment?

Answer 2

If book value is greater than the recoverable cost/amount, then the asset is impaired

Question 3

Regarding assets in use, how do you measure impairment?

Answer 3

Impaired assets are written down to fair value

Question 4

Under U.S. GAAP, can impairment losses on assets in use be recovered?

Answer 4

No

Question 5

Regarding assets held for sale, how do you test for impairment?

Answer 5

If net realizable value is less than book value, the asset is impaired.

Question 6

What is net realizable value (NRV)?

Answer 6

Fair value - cost to sell

Question 7

Regarding assets held for sale, how do you measure impairment?

Answer 7

Impaired assets are written down to NRV

Question 8

Under U.S. GAAP, can impairment losses on assets held for sale be recovered?

Answer 8

Yes but recovery is limited to the amount of the initial loss

Question 9

Are assets held for sale depreciated?

Answer 9

No, assets held for sale and removed from plant assets and no longer depreciated

Question 10

Under U.S. GAAP, how often are assets tested for impairment? (in use & held-for-sale)

Answer 10

Only when certain indications are present