An impairment loss is recorded when capital asset's 1. net book value is higher than the amount it could likely be sold for 2. market value is higher than its accumulated amortization 3. market value is higher than its net book value 4. net book value is higher than its accumulated amortization

An impairment loss is recorded when capital asset's 1. net book value is higher than the amount it could likely be sold for 2. market value is higher than its accumulated amortization 3. market value is higher than its net book value 4. net book value is higher than its accumulated amortization

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: The book value of a depreciable asset is A. The original cost of the asset. B. The…

A: Book value of a depreciable asset means value at which that asset is shown in the balance sheet of…

Q: With depreciation, the book value of a fixed asset usually ___ __ ___ with the asset's market value

A: Introduction: - Depreciation is a non-cash expense. Depreciation is charged on fixed asset over a…

Q: When applying the equity method, how is the excess of cost over book value accounted for? A) The…

A: The net asset on something like a statement of the financial statement is expressed as the amount by…

Q: Depreciation is generated due to a. Increase in the value of liability Ob. Decrease in capital…

A: Lets understand the meaning of depreciation. Depreciation is a reduction in value of asset due to…

Q: 4. The most appropriate definition of depreciation is: A. A means of determining the decrease in the…

A: Introduction:- The following methods used to calculate depreciation as follows under:- Straight…

Q: An asset is considered impaired if: O the fair market value of the asset exceeds the carrying value…

A: In accounting, an asset is considered impaired when its carrying amount (book value) is greater than…

Q: Statement 1: In impairment loss, the discount rate being used is the current pretax rate that…

A: Ans. While computing impairment loss it is necessary that the cash flows are adjusted and multiplied…

Q: An asset is impaired if: O a. The amount to be recovered through use (or sale) of the asset exceeds…

Q: Depreciation is a process that involves: a. Increasing the value of assets b. Distributing the cost…

A: Depreciation reflects the gradual consumption, wear and tear, or obsolescence of the asset as it…

Q: 1.) If a newly acquired asset is ‘held for sale’, the asset or disposal group will be measured at:…

A: Hi student Since there are multiple questions, we will answer only first question.

Q: Depreciation is ........of cost of fixed assets (a) Apportionment (b) Allocation (c) Expenses (d)…

A: Depreciation is the decrement in the value of tangible assets by the wear and tear during the…

Q: If the “fair value less cost to sell” of a noncurrent asset held for sale is lower than its carrying…

A: Impairment of an asset is required when there are indication that an impairment loss may have…

Q: Impairment of a long-term operating asset occurs when ________. Group of answer choices an asset or…

A: The objective of the question is to identify the correct scenario under which the impairment of a…

Q: Depreciation does not measure the decline in market value of an asset each period. True False

A: Depreciation is a financial method used to allocate cost of a tangible asset like land or building…

Q: Indicate whether each of the following statements is true or false. An impairment loss is the…

A: 1. True, Impairment loss occurs when the asset suffers a depreciation in the Fair value(Expected…

Q: What element must be present when determining if an asset is a depreciating asset? a. An asset…

A: Depreciation is a reduction in the value of assets due to the usage of that asset. depreciating…

Q: Which of the following statements is false? (a) Financial Instruments are intangible assets (b)…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: In which of the following situations would a cost incurred after an asset’s acquisition be…

A: Asset A resource with a monetary value that is owned or managed by a person, company, or nation in…

Q: When an impairment loss occurs, the carrying amount of the asset should be reduced to its a) ©…

A: Impairment: It implies to an increase in the fixed asset's carrying value in relation to the price…

Q: The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were…

A: Book value of assets = Cost of the assets - Accumulated depreciation Gain from sale of assets occurs…

Q: True or False: The loss in the market value of tangible fixed assets is referred to as depreciation.

A: Introduction: Depreciation is a source of pre-expense. It is applied to fixed assets over the…

Q: State which statement is true or false The declining-balance method does not deduct the residual…

A: The declining-balance method does not deduct the residual value in computing the depreciation…

Q: True or False: Depreciation is the decline in the market value of tangible fixed assets.

A: Fixed assets are assets having a life of more than one year. Fixed assets like buildings, equipment,…

Q: When market value of an asset is higher than book value, depreciation is not charged. A) True B)…

A: Meaning of depression. Depreciation is a reduction in the value of asset due to wear and tear,…

Q: Q1 Which of the following statement (s) is (are) true? (i) When no future economic benefits are no…

A: Intangible assets are those assets that lack physical substance and are identifiable and…

Q: When identifying undervalued and overvalued assets, which of the following statements is least…

A: While identifying whether the assets are undervalued or over valued, the required rate of return as…

Q: Accounting Which statement is false? Accounting for asset retirement obligations (ARO) apply to both…

A: The given question asked about the correctness of the statement. Assets retirement obligations:…

Q: Same data in I1, but assuming the use of asset revaluation method, how much is the total asset…

A: Revaluation of assets is done to find out their current or present value on the basis of the net…

Q: The sale of a depreciable asset resulting in a gain indicates that the proceeds from the sale were…

A: Depreciable assets are those fixed assets on which depreciation is charged over the years and net…

Q: A deduction for percentage depletion is allowed even though the entire cost of the asset has been…

A: Depletion: It refers to the process of proportionately distributing the cost of the extracting…

Q: (Multiple Choice Question) Amortizable Cost refers to 1. An asset's Net Book Value minus its…

A: Amortizable cost refers to that cost of a fixed asset which has to be charged as an expense either…

Q: A. True or False: ________ 1. Depreciation is the decline in the market value of tangible fixed…

A: Introduction:- Depreciation is a non cash expenditure. It is charged on fixed assets over estimated…

Q: (a) When would the disposal of a long-term asset result in no gain or loss? (b) When would the…

A: Long-term assets can be defined as those assets which are held by an investor for a period of more…

Q: A loss on impairment of an intangible asset under IFRS is the asset's: a. carrying amount less the…

Q: When accounting for self-constructed PPE and computing the amount of interest cost to be…

A: Self constructed PPE are those Property, Plant and Equipment which is constructed by the business on…

Question

(Multiple Choice Question)

An impairment loss is recorded when capital asset's

1. net book value is higher than the amount it could likely be sold for

2. market value is higher than its accumulated amortization

3. market value is higher than its net book value

4. net book value is higher than its accumulated amortization

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1 : Explanation

VIEW

Step 2 : Answer

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

How is the amortized cost for a financial asset calculated? O Amount of original recognition of the asset plus interest earned till date less repayments received till date O Amount of original recognition of the asset plus interest earned till date Amount of original recognition of the asset Manju Fair value of the asset he Problems
The purpose of depreciation expense is to fairly value capital assets on balance sheet True or false
Where non-current assets are held for sale, they are required to be measured using: the equity method; the lower of carrying amounts and fair values less costs to sell; the lower of cost or market value; fair value.
When an irrecoverable debt recovered is not adjusted for: Multiple Choice Profits are overstated and current assets are understated Profits are overstated nnd current assets are overstated Profits are understated and current assets are overstated. Profits are understated and current assets ere understated.
The key difference between amortization and depreciation is that amortization charges off the cost of an intangible asset, while depreciation does so for a tangible asset. True False
.
Which of the following situations indicates that an asset is impaired?a. The net book value of the asset is less than the asset’s estimated future cash flows.b. The net book value of the asset is more than the asset’s estimated future cash flows.c. The fair market value of the asset is less than the asset’s net book value.d. The fair market value of the asset is more than the asset’s net book value.
When a fixed asset is sold for less than book value, which one of the following will decrease?
According to HKFRS 5, what is the measurement rule of Non-current assets held for sale? 1. The lower of carrying amount and value in use. 2. The lower of carrying amount and fair value less cost to sell. 3. None of them. The lower of carrying amount and fair value. 5. The lower of carrying amount and initial cost. 4.
1. If a Revaluation of an asset is done for the first time and there is a revaluation gain, this should be shown in a. Other Comprehensive Income as a Negative figure b. Other Comprehensive Income as a Positive figure c. The Statement of Profit and Loss Account as an Expense d. The Statement of Profit and Loss as Income
A) What is residual value? Support your answer with an example ( word count 100) B) In practise, would you expect the depreciation expense for a non-current asset to be overestimated or underestimated? Explain why this is the case.
When using the revaluation model of accounting for PP&E assets (asset-adjustment or elimination method), a new depreciation rate must be calculated. depreciation continues to be charged in the original pattern. the related Accumulated Depreciation account is closed to OCI. the difference between fair value and book value is always debited to Revaluation Surplus (OCI).