Ch. 11- quiz

Question 1

Indicators of impairment include external sources of information as well as internal sources of information. There are also some assets which are tested for impairment annually.

True or False

Answer 1

True

Question 2

The recoverable amount is the minimum of either the fair value less costs of disposal or the value in use.

True or False

Answer 2

False

Question 3

If the recoverable amount is higher than the carrying amount, an impairment to the recoverable amount is made.

True or False

Answer 3

False

Question 4

The recoverable amount of an asset is the higher of its fair value plus the costs of disposal or its value in use.

True or False

Answer 4

False

Question 5

Impairment tests are not performed for assets which are depreciated over a definite useful life.

True or False

Answer 5

False

Question 6

Inventories have to be impaired if they could be bought for less than
the amount originally paid.

True or False

Answer 6

False

Question 7

If the irrecoverable amount is higher than the carrying amount, a
liability is recognized.

True or False

Answer 7

False

Question 8

A decrease in market interest rates leading to a decreased discount rate is an external indicator for a reversal of previous impairments.

True or False

Answer 8

True

Question 9

A previously recognized impairment loss relating to goodwill should be
reversed if there is evidence that the loss no longer exists.

True or False

Answer 9

False

Question 10

Future cash flows related to value in use shall be estimated for the
asset in its current condition.

True or False

Answer 10

True

Question 11

An impairment loss shall be recognised immediately in profit or loss.

True or False

Answer 11

True

Question 12

A reversal of an impairment loss shall be recognised immediately in
OCI.

True or False

Answer 12

False

Question 13

If there is an indication that an asset may be impaired, the entity must calculate the asset’s recoverable amount.

True or False

Answer 13

True

Question 14

Which of the following is not an external indication of impairment?

A. The asset becoming idle

B. An adverse change in the market in which the entity operates

C. An adverse technological change

D. An unexpected decline in the asset’s market value

Answer 14

A

Question 15

Which of the following is not an internal indication of the fact that an impairment loss has now decreased or no longer exists?

A. There is evidence that the economic performance of the asset will be better than expected

B. A favorable change has occurred to the manner in which the asset will be used

C. A favorable change has occurred to the extent to which the asset will be used

D. The asset’s market value has increased significantly

Answer 15

D

Question 16

Which of the following assets are tested for impairment annually, regardless of whether a triggering event has occurred or not?

A. Intangible assets available for use

B. Intangible assets with definite useful lives

C. Intangibles assets with indefinite useful lives

D. Internally generated goodwill

Answer 16

C

Question 17

Which of the following statements is correct?

A. In accordance with IAS 36, the cash generating units (CGUs) that goodwill are allocated to must be larger than the operating segments according to IFRS 8.

B. In order to determine the value in use of a cash generating unit, the estimated future cash flows must contain income tax payments.

C. If the impairment loss for an asset exceeds the carrying amount of an asset, the excess amount shall be recognized as a liability.

D. According to IAS 36, the annual impairment test of a goodwill-carrying cash generating unit may be performed at any time during the year, provided it is performed at the same time every year.

Answer 17

D