Chapter 4 Fixed asset impairment Flashcards
What is the first step in determining if there is an impairment on fixed assets?
determine if the expected future cash flows is less than carrying amount. If it is the impairment would be the difference between the carrying amount and the fair value.
what condition must exist in order for an impairment loss to be recognized under US GAAP?
The carrying amount of the long-lived asset is not recoverable.
How is impairment determined under IFRS?
An impairment is recognized if the (fair values less costs to sell) or present value of future cash flows (Which ever is greater), is greater than the carrying value.
How is the reversal of impairment loss treated under IFRS and GAAP?
It is prohibited under GAAP but allowed under IFRS.
When should a long-lived asset be tested for impairment?
At least annually or whenever events or changes in circumstances indicate the varying amount may not be recoverable.
What is the only circumstance that a long lived asset can have its carrying value restored?
If they are held for disposal.
