P1.A.2.4 Asset Valuation - Fixed and Intangible Assets

Question 1

Impairment Test

P1.A.2.4 Asset Valuation - Fixed and Intangible Assets

Answer 1

1. Carrying value > future undiscounted cash flow AKA FV

2. Impairment loss = Carrying value - fair value

Question 2

Double-Declining Balance Method (DDB)

P1.A.2.4 Asset Valuation - Fixed and Intangible Assets

Answer 2

= (2 / estimated useful life) x Carrying value

Question 3

Sum of the Years Digits formula (SYD)

P1.A.2.4 Asset Valuation - Fixed and Intangible Assets

Answer 3

= n(n+1) / 2 = SYD multiplier
n = estimated useful life - # of years
=SYD multiplier x Depreciable cost

Question 4

Units of Production Method

P1.A.2.4 Asset Valuation - Fixed and Intangible Assets

Answer 4

= (Units produced / Total estimated units produced during the life of the asset) x Depreciable cost