impairment types

Question 1

notes red-impaired loan

Answer 1

a loan is impaired when the pv of the future cash flows expected to be collected(using original effective interest rate) is less than cv

bad debt expense 2
allowance for decline in NR 2

cv 10
pv 8
loss= 2

if there is market value for the loan it is used instead of pv

Question 2

impairment test for fixed assets

Answer 2

test
if bv>recoverable cost then it’s impaired
must be nonrecoverable

Question 3

*impairment for fixed assets held for use

and indefinite life intangibles

Answer 3

fv test-if cv will not be recovered
cv>undiscounted cf

impairment loss is bv-fv
no reversal of loss allowed

Question 4

*impairment for fixed assets for sale

Answer 4

asset is written down to nrv(fv-cost to sell). the measurement loss and test for impairment is the same

Question 5

nrv=

Answer 5

fv-cost to sell

Question 6

firs one step process for impairment for fixed assets

Answer 6

recoverable amount>NRV

recoverable amount in in firs is The greater of fair value less cost to sell or value in use.

Question 7

impairment of indefinite life intangibles (same as assets in use)

Answer 7

fv test-if cv will not be recovered
cv>undiscounted cf

impairment loss is bv-fv
no reversal of loss allowed

Question 8

*goodwill impairment

Answer 8

step 1 cv>fv

step 2 cv of gw>implied fv of gw