F4 - Fixed Asset Impairment

Question 1

Impairment loss calculation

Answer 1

Step 1: Compare Undiscounted future net cash flows to Net carrying value
*If negative, impairment, go to step 2

Step 2: The amount of the impairment loss is the amount by which the carrying amount exceeds the fair value of the asset.

Question 2

Under IFRS, impairment exists when:

Answer 2

The carrying value of a fixed asset exceeds the fixed asset’s recoverable amount.

The recoverable amount is the greater of the fair value of the assets less cost to sell and the asset’s value in use (PV of future cash flows)

Question 3

Under U.S. GAAP, long-lived assets that are impaired can only have their carrying value restored if:

Answer 3

They are held for disposal.