F3 - M8 - Impairment

Question 1

Under U.S. GAAP, finite-life intangibles are tested for impairment using a two-step test, what are they

Answer 1

1) An asset fails the recoverability test if the asset’s carrying value is greater than the sum of future
undercounted net cash flows. 2) Then, if the asset’s carrying value is greater than the asset’s fair market value, the excess is the impairment loss.

Question 2

The first of the two step test are: An asset fails the recoverability test if the asset’s ______ is greater than the __________ net cash flows.

Answer 2

carrying value; sum of future undiscounted

Question 3

The second of the two step test are: Then, if the asset’s _______ is greater than the asset’s _________, the excess is the impairment loss.

Answer 3

carrying value; fair market value

Question 4

________are tested using a one-step test in which carrying value is compared with fair value.

Answer 4

Indefinite life intangibles other than goodwill

Question 5

Under U.S. GAAP, impairment losses cannot be reversed unless the asset is ___________.

Answer 5

held for disposal.

Question 6

Under IFRS, an impairment loss for an intangible asset other than goodwill is calculated using a ______ model in which the carrying value of the intangible asset is compared with the intangible asset’s recoverable amount

Answer 6

one- step

Question 7

Under IFRS, an impairment loss for an intangible asset other than goodwill is calculated using a one- step model in which the ______ of the intangible asset is compared with the intangible asset’s __________.

Answer 7

carrying value; recoverable amount

Question 8

IFRS defines the recoverable amount as the greater of the asset’s __________ and the asset’s _______.

Answer 8

asset’s fair value less costs to sell; value in use

Question 9

Value in use is the ___________ expected from the intangible asset.

Answer 9

present value of the future cash flows

Question 10

______ allows the reversal of impairment losses.

Answer 10

IFRS

Question 11

Fixed asset impairment under U.S. GAAP contains two steps: what are the 2 steps (Just read)

Answer 11

Step 1—test for recoverability: If the sum of undiscounted expected future cash flows is less than
the carrying amount, an impairment loss needs to be recognized, Step 2—calculate impairment loss: The impairment loss is the amount by which the carrying amount exceeds the fair value of the asset.

Question 12

For fixed asset impairment under US GAAP, the first step is test for _________.

Answer 12

test for recoverability

Question 13

Step 1 for Fixed asset impairment —test for recoverability: If the ________ is less than
the _______, an impairment loss needs to be recognized

Answer 13

undiscounted expected future cash flows; carrying amount,

Question 14

Step 2 for Fixed asset impairment—calculate impairment loss: The impairment loss is the amount by which the _______ exceeds the ______of the asset.

Answer 14

carrying amount ; fair value

Question 15

A fixed asset impairment under IFRS is calculated using a single-step model in which impairment is the amount that the ________ exceeds the higher of either (2)

Answer 15

carrying value; Fair value less costs to sell; Value in use (present value of expected future cash flows)

Question 16

If the impaired asset is held for use, the asset is written down to ______ and subsequent depreciation is based on that value.

Answer 16

fair value

Question 17

Under U.S. GAAP, if the fair value were to subsequently “rebound,” _______ is permitted. Restoration is permitted under IFRS.

Answer 17

no restoration

Question 18

If the asset is held for disposal, ______ is discontinued.

Answer 18

depreciation

Question 19

For Held for disposal, If the fair value were to partially recover prior to sale, a ______ is permitted under both IFRS and U.S. GAAP.

Answer 19

restoration