BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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other shareholders hold more than 50% interest.
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a more-likely-than-not expectation exists that a reporting unit will be sold or disposed of.
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a specific unit does not have publicly traded stock.
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using the equity method.
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Detailed explanation-1: -The test must be performed at least annually and between annual tests whenever there is an indication of impairment. IAS 36 requires an entity to compare the carrying amount of a cash-generating unit with its recoverable amount.
Detailed explanation-2: -Under IAS 36, ‘Impairment of assets’, these assets are required to be tested annually for impairment irrespective of indictors of impairment (IAS 36 para 10). The standard states that it is acceptable to perform impairment tests at any time in the financial year, provided they are prepared at the same time each year.
Detailed explanation-3: -In addition, IAS 36 requires certain assets to be tested for impairment annually, irrespective of whether there is any indication of impairment. These are: • Goodwill acquired in a business combination; • Intangible assets with an indefinite useful life; and • Intangible assets which are not yet available for use.
Detailed explanation-4: -An impairment loss should only be recorded if the anticipated future cash flows are unrecoverable. When an impaired asset’s carrying value is written down to market value, the loss is recognized on the company’s income statement in the same accounting period.